Renault CEO backs new EU rules on sourcing local parts, but seeks broader definition

PARIS (Reuters) -Renault Group supports demands by several automotive suppliers to introduce EU-wide rules on local sourcing to protect them from Chinese competition, the French automaker's CEO told Reuters.

But its support depends on a broadening of the definition of so-called Local Content Requirements, he added.

Several suppliers have called for 80% mandatory local content in cars sold in the EU, in line with similar legislation in place in the United States, as part of the strategic dialogue started at the beginning of the year between the European Union and the automotive sector. 

But Renault Chief Executive Francois Provost said it is unlikely that regulations that tight would be adopted by December 10, the date on which the European Commission is expected to unveil a list of measures to support the bloc's automotive industry.

SCHEME MUST NOT BE OVER-COMPLICATED

"We have to be realistic: complicated local content schemes per model, with mandatory parts, will never work," Provost said. "The only system that can work is local content averaged across a manufacturer's sales. This would allow us to achieve our desired objective, which is to support the European sector and, above all, our suppliers."

This broader definition, with an average obligation that could reach, for example, 60%, would help convince other sector players - such as German carmakers - who are reluctant to accept the rule fearing it will make it harder to choose suppliers and hinder competitiveness.

"Any other solution would end up not working and not being implemented … if that is what we want!" Provost said.

THE THREAT OF DISPLACEMENT

The European automotive suppliers' association Clepa warned again on Monday that manufacturing in the EU is threatened by displacement and that no less than 350,000 jobs could be at risk by 2030.

The CEO of parts supplier Valeo, Christophe Perillat, said at the firm's investor day on Thursday that without local content requirements, site closures in Europe would be inevitable in the long term.

"If they do not decide for a European content per car minimum, then there will be significant, massive, delocalization of the automotive industry from Europe to the rest of the world, let's say from Valeo Europe to Valeo China for instance," Perillat said.

Provost, who succeeded Luca de Meo last summer when he left to head the luxury group Kering, met European Union representatives in Brussels last Tuesday.

"The positive point is that I feel they understand the sense of urgency, the need to move forward, however I really get the impression that important points are still under discussion," he said.

(Reporting by Gilles Guillaume; translated by Alessandro Parodi; Editing by Conor Humphries)