Renault to Shift 70% of Clio Production to Turkey image

Renault might manufacture 70% of its Clio subcompacts in Turkey, a decision that might worsen tension with the government and workers.

Renault declined to comment on manufacturing plans for the fourth generation Clio, which is France’s best-selling car in 2012, but it is known that 41% of the last Clio version was produced domestically, 46% in Turkey and 13% in Spain.

This news is a tough blow for the French President Francois Hollande who promised to reverse the unemployment trend within a year, putting pressure on companies not to cut jobs in the country. In 2011 Renault’s plants in France accounted for 42% of the automaker’s overall deliveries in Europe, compared with 64% for rival Peugeot, which announced 8,000 job cuts and a plant closure near Paris earlier this year.

The French government owns 15% of Renault, and its decision to shift production to lower-wage countries has led to a tensioned relationship between the two. In 2010, when reports that the Clio could be moved abroad were made public, Renault’s CEO Carlos Ghosn was summoned for a public reprimand by former President Nicolas Sarkozy.

“They’re obviously under pressure and may have to decide whether to build more (Clios) in France to keep the peace with the government,” said London-based UBS analyst Philippe Houchois.