Renault operations in Brazil last year cut losses by more than 50% compared to 2005, after the parent company that year pumped in $230m to reduce the red ink of previous years. The 2006 deficit still topped some $100m, but this year the bottom line should look a lot better.

Production in 2007 went from one to two shifts due to the upcoming Logan (sales commence in July) and the recovery of the Mégane II saloon and estate/wagon (called Grand Tour in Brazil). Renault’s plan is to produce 112,000 units (Nissan included) for both local and foreign markets this year, a 63% growth over 2006. Current capacity is 200,000 a year.

The automaker is confident of trimming the 45% excess capacity by increasing production of four new Renault models and two Nissans by 2009, with a total investment of $350m. As part of this plan, the transfer of all Clio saloon and hatchback production to Argentina is already under way.

The neighbouring country will also get an investment of $80m to launch new products. One of them will be the updated Kangoo – including a seven-seat version – and a new medium-size sedan to be built exclusively at the Santa Isabel plant, in the province of Cordoba from December 2008.

Over 80% of this new model’s output is due to be exported to Latin America and perhaps Europe.

The Argentine unit will lower excess capacity also, from 165,000-unit-capability a year and 60,000 units actually made to 100,000 by 2009.

Fernando Calmon