PARIS (Bloomberg) -- Renault SA said it's seeking an early-retirement agreement with unions in response to declining domestic production.
The company is holding talks under French labor laws that allow factory workers to seek early retirement, said Caroline De Gezelle, a spokeswoman at Renault's headquarters near Paris, declining to comment on the number of employees affected because the negotiations are ongoing.
The plan is linked to forecasts that include an estimated 23 percent output drop next year at Sandouville, the northern French plant producing the Laguna and Espace models, she said.
Renault's domestic production has fallen in step with declining sales of larger cars assembled exclusively in France. Smaller models such as the Clio subcompact and Twingo minicar are increasingly manufactured for the western European market in Turkey, Slovenia and other lower-wage economies.
Renault has said it may transfer future replacements for the Espace minivan and Laguna mid-sized car to its plant in Douai, France, from Sandouville.
Renault in September repaid one-third of an emergency 3 billion euro ($4.1 billion) state loan it received early last year to carry it through the credit crunch. Renault promised in return to avoid job cuts.
“They got government funding to maintain capacity,” London-based Credit Suisse analyst Arndt Ellinghorst said in a telephone interview. “Now they're paying it back and there's a debate on what has to be done.”
Production at Sandouville, which employs 2,500 people, is likely to drop to 53,000 vehicles next year from an expected 69,000 in 2010, De Gezelle said. The plant will be shuttered between Dec. 17 and Jan. 14 for maintenance work and the conversion of a production line.
Renault's domestic production slump also reflects western Europe's gloomy auto-sales outlook in 2011, Ellinghorst said.
“The markets that will be doing particularly badly are France, Italy, Spain and the UK,” he said. “These are Renault's core markets.”
In Renault's last round of voluntary departures, which ended last year, the company cut about 4,800 jobs from its French work force, which totaled 55,000 employees as of Dec. 31.