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November 25, 2005

ROMANIA: Renault and Nissan eye former Daewoo factory

Renault and Japanese partner Nissan have expressed interest in buying a former Romanian Daewoo car factory from the government.

Renault and Japanese partner Nissan have expressed interest in buying a former Romanian Daewoo car factory from the government.

The Financial Times (FT) said that Renault wants to use the plant, in Craiova, to expand production of its Dacia Logan saloon, after the Romanian-built car proved an unexpected success.

The two companies reportedly signed a joint letter of intent on Wednesday with the Romanian privatisation agency, giving them access to more data on the factory.

The FT said that the Romanian state has a controlling interest in a holding company that owns 49% of the plant, and wants to buy the 51% held by bankrupt Daewoo Motor.

The financial newspaper said it is not clear which models Nissan would build at the plant, but the company is trying to expand in eastern Europe, and Romania would provide it with a low-cost manufacturing location. It has factories in Sunderland in north-east England and in Barcelona, Spain.

The Financial Times said the possible bid comes as Renault is considering how to increase output of the Logan from its Dacia factory in Pitesti, Romania – it sold 110,000 Logans by the end of October, well ahead of the 100,000 planned.

The FT said that Daewoo invested $US800m to modernise the Romanian factory in 1994 as it was aggressively expanding worldwide, and the plant has continued to build several Daewoo models, including the Matiz, under licence from GM Daewoo, which bought most of Daewoo Motors’ assets in 2002.

The Financial Times said the plant has 3,600 staff and has survived the bankruptcy of its parent through a network of Romanian dealers which makes it the country’s second-biggest selling brand, but its licence to make Daewoo cars expires in January, making a sale urgent.

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