PARIS -- Renault has accepted French President Nicolas Sarkozy's demand that any carmaker expecting aid from the French government agree to maintain existing manufacturing operations in France.
CEO Carlos Ghosn told a mid-January auto summit that he has no plans to close any of Renault's French factories, even though they are less competitive than factories in central and eastern Europe.
To illustrate the competitive disadvantage between the two regions, Ghosn said there is a minimum 10 percent price differential on a 14,000-euro car, depending on whether it is designed and produced in France or in low-cost countries in the east.
The 1,400-euro gap between the car made in France and its Czech, Slovak, or Polish competitor includes 400 euros for salaries, 750 euros of payroll taxes for the health and retirement system, and a further 250 euros of business tax, Ghosn said.
Ghosn, who is president of the European auto manufacturers association ACEA, said it was critical that governments act now to ensure the mid-term competitiveness of the auto industry.
The long-term solution to preserving an auto industry in Europe will be to reinforce its capacity for innovation, Ghosn said.