Is Renault serious about entering the Chinese market? Chairman Carlos Ghosn's 'Renault Commitment 2009', announced in February, didn't specifically mention the on-off plan, which originally envisaged Renault building its Logan 'World Car' in China, in partnership with Dongfeng Motor, the Chinese joint-venture partner of its affiliate Nissan.

Late last year, rumours were rife that the French automaker was poised to suspend a plan to build cars in China and focus instead on emerging markets where Renault already has a presence.

Renault insiders said the company's emerging markets strategy would focus on expanding in India, stemming losses in Brazil, building up the Dacia plant in Romania, growing the Avtoframos factory in Moscow and establishing a plant in Iran.

Ghosn's revival plan, which envisages Renault boosting production by 800,000 units to 3.3 million units worldwide by 2009, steered clear of specific mention of the China plan, though Ghosn is believed to still be keen on the idea - but with crucial modifications. He told reporters last November: "Renault doesn't yet have a project in China but the story is not finished."

Renault has been seeking a Chinese partner since 2002, and in 2004 signed a framework accord with Dongfeng Motor about setting up a manufacturing facility in China to build its Logan. Under the Dongfeng-Renault accord, Renault wanted to build 300,000 Logan and Megane cars a year in southern China.

But the talks became bogged down last year largely on a dispute over where to site the plant. Renault wants to build it in the Huadu automotive park near Guangzhou, in southern China, close to the existing Nissan-Dongfeng plants, enabling it to gain access to an established supplier base. But Dongfeng wants to set up the plant in a region where there is under-employment, Ghosn told French media.

Now Ghosn is seeking a compromise. And instead of the cheap-and-cheerful Logan, he wants to base the plan round the more expensive - and more profitable - C-segment Mégane. But volumes are likely to be much lower - this might be the price the Chinese pay for getting the plant built where they want it.

Why does Renault need a presence in China? Its brand has almost no visibility there, while Nissan has wide-ranging and ambitious plans - including developing its own "Logan" - a small, 1-litre world car aimed specifically at emerging markets.

In 2005, Dongfeng Nissan sold 157,516 vehicles, up 159% compared with 2004, making the company the fastest growing automaker in China. It plans to boost the Huadu plant's capacity from 150,000 units at present to 270,000 units by the end of the year. The company is aiming for vehicle sales of 200,000 units in 2006 and capacity at the new engine plant in Huadu will swell from 180,000 to 360,000 by 2008.

The plant will produce the HR16DE and MR20DE gasoline engines which were jointly developed by Nissan and Renault - which would give crucial local content to any Renault China plant.

However, there are plenty of places where Renault can go with the Logan before it needs to address China - it's building plants for the car in Brazil, Morocco, India and Iran, and some of these markets have their own problems - especially Brazil, where sales tumbled 10% last year. And profits in Europe have fallen too as the market gets tight.

Renault has other problems close to home: its luxury cars, such as the Avantime and Vel Satis, have flopped, and now Renault is believed to be looking to buy a luxury brand. Its preference is for Volvo, but Ford is reluctant to sell the Swedish brand - which nearly merged with Renault a decade ago. Jaguar and Saab are also on the shopping list. Ghosn's plan outlines the launch of new, luxury models priced above €27,000.

So while China may still be in Ghosn's mind, it's clearly slipped down the priority list, and is likely to be a low-key initiative, rather than a grand design. Which could make it too little, too late.

Mark Bursa