Renault agrees to maintain partial production of Clio in France

French auto giant Renault has agreed to keep some of the production of the Renault Clio in France, according to the Elysée presidential palace. Renault's CEO Carlos Ghosn met with French President Nicolas Sarkozy on Saturday afternoon.

France's second largest carmaker, Renault, has come under heavy pressure from the government to keep jobs at home following press reports about a planned shift in production of its Clio model from France to Turkey.

Industry Minister Christian Estrosi said Renault's production strategy was a political issue.

"This will be decided during a meeting Saturday between the president of the republic and Renault president Carlos Ghosn," Estrosi told reporters.

The French state is Renault's biggest shareholder, with a 15-percent stake.

The minister met this week with Renault's chief operating officer, Patrick Pelata, who said no decision had been made on stepping up production in Turkey for the new Clio IV.

"No decision has been taken because it is not yet time to make decisions," he said, but added that some of the new Clio's assembly will take place in France.

"In any case, the Clio will be produced in Flins (near Paris), regardless of what happens, and that is very clear," said Pelata.

France's minister for Europe, Pierre Lellouche, rejected suggestions that the pressure on Renault to not move production abroad could violate the terms of the French deal last year to support the car industry.

EU Competition Commissioner Neelie Kroes said in Brussels that there was an "apparent contradiction" between the French government's latest move and promises it made last year that subsidised loans to national car producers would not affect their freedom to move their operations.

"Nothing in the agreed commitments forbids the state as a shareholder from discussing the company's strategy with Renault's managers and expressing its wish to have a vehicle intended for the European market made in the EU," Lellouche said in a statement.

French government measures taken last year to support the auto sector in the economic downturn included generous loans to carmakers on condition that they keep production and jobs in France.

"We're not giving all that money to support the auto sector so that all our factories can leave to go abroad," Sarkozy told members of parliament at an Elysee meeting on Wednesday.

"I strongly contest the idea that these big companies, just because they are global, no longer have a nationality."

Budget minister Eric Woerth separately said that the state was not planning to increase its stake in Renault but "if that's what is needed, then we will do it."