Renault boosts Spanish plants with 5 new hybrid SUVs

Renault will build five new hybrid SUV models at its Spanish plants in 2022-24 as part of a new labor agreement with unions, CEO Luca de Meo said.

De Meo visited Renault's factory in Palencia, which builds the Captur small SUV, with King Felipe of Spain and Prime Minister Pedro Sanchez on Tuesday to announce the agreement. He did not say which models would be built there and at another factory in Valladolid, which builds the Kadjar compact SUV and also produces engines for Renault.

French and Spanish media, citing unions, said the new models would include the next-generation Kadjar, which would be expanded into a three-vehicle family, with the addition of a seven-seat variant and a coupe-style version. The Palencia factory would get a new vehicle built alongside the Captur, potentially branded as a Mitsubishi. 

Renault Group recently reached an agreement to build two new "sister models" for alliance partner Mitsubishi Motors starting in 2023, as the Japanese automaker reverses a decision to wind down operations in Europe.

The Valladolid engine factory will build a coming 1.2-liter 3-cylinder gasoline engine that will form the base of all new Renault drivetrains after 2025, coupled to Renault's modular E-Tech hybrid system, the reports said. A plant in Seville will manufacture hybrid transmissions. 

The announcement comes 10 months after alliance partner Nissan said it would shut its three Spanish plants by December as part of a wider overhaul.

A Renault spokesman did not immediately respond to requests for comment.

According to de Meo's Renaulution turnaround plan, the core Renault brand is launching five compact vehicles in the next four years. De Meo wants to shift Renault's center of gravity to more-profitable compact vehicles from the small segments, where the brand has been a market leader with the Clio and Captur. 

In addition to the next-generation Kadjar – which will share underpinnings with the Nissan Qashqai – Renault introduced the Arkana coupe-style SUV this year, and will launch the full-electric Megane-e toward the end of this year.

The automaker will make Spain, which is Europe's second-largest car manufacturing country after Germany, a major hub for its E-Tech hybrids as it seeks to refocus its business to cut costs and improve margins after reporting an 8 billion euro loss in 2020.

De Meo said in a recent interview with Automotive News Europe that Spain is one of several key manufacturing hubs for Renault Group, along with Romania, Turkey and Morocco, because of lower costs than in its home base of France. He described those countries as "winning horses" that Renault was betting on to help increase manufacturing efficiencies and lower costs.

"This plan reinforces Spain's position as Renault's second home," de Meo told workers at the Palencia plant.

De Meo did not give any investment details, but said Renault's new strategic plan would generate an estimated 12 billion euros ($14.3 billion) for the Spanish economy in the next three or four years.

Reuters contributed to this report