As a first act in the "Renault Commitment 2009" play in Brazil, the French automaker will invest $US120 million here this year.

The announcement came soon after Renault president and CEO Carlos Ghosn - a Brazilian - said last week in Paris that the situation of the company in Mercosur countries, particularly Brazil, was frustrating.

After 10 years in Brazil, Renault has accumulated only losses and its São José dos Pinhais facility, opened in 1999, works at only 35% of installed capacity.

But Ghosn has ordered Brazil and Mercosur to fight the problems rather than retreat. So Renault do Brasil president and Renault Mercosul director-general Pierre Poupel has revealed a strategy of model renewal for the region where automakers often sell obsolete models, with cheaper versions sometimes lacking standard items like airbags and anti-lock brakes, long after they have been replaced in markets apparently views as more sophisticated - like western Europe.

Renault also will spend $US30 million in Argentina in 2006.

According to Poupel, the company will introduce five new Brazilian-made vehicles in the next few years. The first is the Mégane II sedan now in production at São José dos Pinhais ahead of its March launch. This is a car Europe has had since 2003.

In the second half, Renault will add the station wagon version, another car western Europe has been offered for at least a couple of years.

In 2007, Renault will build two versions of the Logan low-cost model in Brazil - this is actually a current model. One will be a sedan while the second hasn't been confirmed but a wagon is likely as it's all but been announced elsewhere.

The name of the fifth new car is also still secret but there is plenty of new Renault product in the French pipeline and the forthcoming new Twingo would be a strong bet for a region in which low-cost, low-capacity petrol and bio-fuel cars dominate.

Apparently belatedly realising that even low-cost car buyers like something new once in a while, Renault is speeding up adapting European models to South American requirements. It will enlarge its research and development centre staff count in Brazil from the current 60 to 200 by the end of this year.

Brazilia R&D will also help European engineers develop flex-fuel engines for Europe.

In its "Renault Commitment 2009" announcement last week, the company said that 50% of its petrol-powered engines sold in Europe in 2009 could operate on a mix of petrol and ethanol and its Brazilian experts would help with this objective.

In Brazil, Renault makes flex-fuel engines for its locally-built Clio and Scénic (both still previous generation) while the upcoming new-gen Mégane sedan will be launched with a 1.6-litre 16-valve flex-fuel engine. A two-litre flex-version is coming, too.

Following Ghosn's growth order, Renault is after 7% of market share by 2009, up from 2.9% last year, when its sales fell 11.2% as the market overall rose 8.6%.

So should heads roll? One is. Pierre Poupel retires on 1 May, replaced by current Renault Samsung Motors managing director Jérôme Stoll.

Renault has three factories in São José dos Pinhais city - a car plant, an engines factory and a Renault-Nissan Alliance light commercial vehicle plant.

Elsewhere in Mercosur, the automaker has a car plant in Argentina's Cordoba city.

Rogério Louro
Additional reporting: Graeme Roberts