Renault chief Louis Schweitzer rejects widespread claims that the global car industry is threatened by over-production, writes Mike Duffy.

Schweitzer predicts that the current world market of 50 million vehicles will grow to between 60 million and 80 million over the next decade.

"If the Chinese ever wanted to own as many cars as the French, it would be impossible for the car industry to keep pace with demand,'' Schweitzer said.

"If you look at Eastern Europe you have the potential for very fast growth. I believe it is impossible to predict with any degree of certainty the size of the market in any particular country.

"I do believe there is room for growth in any country throughout the world.''

Schweitzer said that an impartial observer looking at car manufacturers worldwide might conclude there was over-production.

"But if we speak with other car makers they say they lack capacity,'' he said.

"That may seem a bit surprising. Most of us have too many plants and should re-group our plants. But when Renault re-grouped our plants we went from two to three shifts at remaining plants and that resulted in capacity not being reduced.''

The Renault chairman and CEO said manufacturers who had a successful model lacked capacity while those with unsuccessful models had idle plants.

"So I would not consider we have structural over-capacity in the global car industry. We have over-capacity, of course, when the market slumps - then everyone has idle plants. But that is linked to the technical nature of our business.''

Schweitzer said that when a new market emerged, everyone set up manufacturing facilities there. As there was a minimum size for an efficient plant, then instant over-capacity was created.

"Everyone went to Brazil at the same time but that is not a problem of over-capacity in my view. There is active competition in the market which means we are all trying to push our neighbours out to make more room for ourselves."

Schweitzer said a 20 percent increase in the global market over the next 10 years was less than two percent a year - and readily achievable.

"The car is the symbol of affluence, it is a symbol of success, in many cases as soon as people can afford it, a car is something most want to have.

"We at Renault are developing the 5000 euro car to offer something that is affordable to low-income countries.

"If you look at the average income of France when the car industry first started to grow it was not very high.''

He said there did not need to be "an enormous increase'' in the average income in Russia to cause a significant increase in demand for cars.

Schweitzer said that every independent vehicle manufacturer could continue to remain independent - with the exception of Korea's Daewoo and Britain's Rover.

"If you look at history there are times when things are moving rapidly and there are times when things are moving more slowly. That is true of the automotive industry,'' he said.

He said the families which owned majority equity in BMW and Porsche could always decide to sell their shares but neither needed to.

He said he saw some stabilisation within the car industry.

"As far as Renault and Nissan are concerned, our ambition is to form a bi-national group - a system where you have two companies with one common strategy but separate roofs which should remain separate.

"I do not see the need to go for a true merger in the natural sense of the word.''

When pressed, Schweitzer effectively named Nissan president Carlos 'Le Cost Killer' Ghosn as his successor.

"When I asked Ghosn to join Renault some years ago, it was because I thought he was good. What he has done (turning Nissan's massive losses into profit ahead of schedule) proves he is very, very good. So, to me, it seems quite natural that he might go further.

"Is he my preferred successor? It would seem rather natural,'' Schweitzer said.

Author Mike Duffy is motoring editor of The Advertiser and the Sunday Mail in Adelaide, South Australia


To view related research reports, please follow the links below:-

Global Car Forecasts to 2005

Renault Strategic Review


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