Renault is to end production of its Laguna family car at the Sandouville plant in France, replacing it with a model sourced from its South Korean affiliate Samsung.


The car is currently being developed and engineered by Renault as a replacement for the Samsung SM5 which goes on sale in Korea at the end of this year and in global markets, including Europe, badged as a Renault, from 2010.


Sandouvile will run out production of the current Laguna and Espace and the factory will be turned over to light commercial vehicle production. Plans for an eventual Espace replacement have been suspended.


Renault president and chief executive officer Carlos Ghosn told the 2008 financial results press conference that the new large model would be a similar size to the Camry [a larger than D-segment model hugely successful in the US and Australia but dropped from the Toyota Europe range several years ago – ed].


The move is part of a greater rationalisation of the Renault group as it looks to cut costs in the wake of the financial crisis. The company reported a wider-than-expected second-half loss in 2008.


Ghosn said even the projected fall in world vehicle sales from over 60m in 2008 to 55m this year may be optimistic.


He said early 2009 sales were running at an annualised rate closer to 50m.


Despite being ahead in the first half of the year, Renault reported a EUR653m operating loss for the second half, compared with a EUR632m profit the previous year.


Full-year operating profit was EUR212m.


The company will also step up its policy of cutting fixed costs in 2009 and strengthen operational synergies with Alliance partner Nissan Motor by converging engine ranges and working together on electric vehicles.


Chief financial officer Thierry Moulonguet said Renault would cut investment by 20% this year and has already postponed the construction of a new plant in Morocco by six months and may abandon completely a joint factory project in Chennai, India, with Nissan, recouping half of its EUR700m, leaving its Japanese partner to build a smaller, cheaper facility alone.


Ghosn said that Renault’s original 2009 Commitment plans to achieve an operating margin of 6% and grow sales globally by 800,000 between 2005 and this year is now “obsolete”.


He added: “We are in a deep crisis which may ultimately change the automotive landscape. At the moment we cannot see the bottom and when there is an upturn we don’t know whether it will be ‘v’-shaped or ‘u’-shaped. We have to make sure that we are ready to deliver the sort of products that consumers want when we come out of the crisis.”


This includes smaller cars with lower emissions and electric vehicles which Renault is developing with alliance partner Nissan.


“Our electric vehicle project is moving ahead and we now have 11 contracts with governments and companies to have EVs on the road by 2010 and a full range of vehicles by 2012.”


Because of the current downturn, Ghosn said he could make no sales or production predictions for this year and, wearing his hat as president of the European manufacturers’ association Acea, called on the EU to be more proactive with aid to the car industry which employs some 12m people across the region.


He also defended individual aid plans being put forward by seven of the 27 EU member states. “Aid packages, such as scrappage schemes, benefit manufacturers, dealers, customers and the environment.


“To say that individual government should not give subsidies is not realistic. Every government is interested in having an auto industry and they all work hard to encourage manufacturers to establish plants – their main concern is providing or maintaining jobs.”


Ghosn was not able to give any guarantees over the future of Renault’s four Spanish operations – two car factories, which assemble the Modus and Clio, and engine and stamping plants.


The Spanish market was down 50% in 2008 and Ghosn added: “At the moment we have nothing in the pipeline to put into production in Spain and we are talking to the government and regional authorities about the future of the operations there.”


The UK is another market which is bad news for Renault – the plummeting pound against the euro means that the company loses money on every car it sells here.


Renault UK said it would combat this by concentrating on high value business and pulling out of such things as short-term rental and Motability.