(Clarifies new projects, adds French union reaction)
MADRID, March 23 (Reuters) - France’s Renault said on Tuesday it would start producing five new hybrid SUV models in its “second home” Spain in 2022-2024, strengthening its position in the country following an agreement with unions.
The carmaker will make Spain, Europe’s second-largest car manufacturer after Germany, a major hub for its E-TECH hybrids as it seeks to improve profit margins and cut costs after reporting an 8 billion euro ($9.5 billion) loss in 2020.
Renault currently manufactures three vehicles at its Palencia and Valladolid plants in northwestern Spain.
“This plan reinforces Spain’s position as Renault’s second home,” Chief Executive Luca de Meo told an event at the Palencia plant, which will produce three new compact and larger-size models.
Its Valladolid plant will manufacture two new city cars starting in 2024, while another factory in Seville will produce two new gear boxes in 2022 and 2024.
Spain’s King Felipe and Prime Minister Pedro Sanchez also attended the event.
De Meo did not give investment details, but said Renault’s plans would generate an estimated 12 billion euros for the Spanish economy in the next three or four years.
Spain has lower production costs than France, giving it a potential edge.
Renault’s Spanish ambitions riled some French unions at a time when it is facing protests over the sale of one French plant and a plan to subcontract some business at another site.
“This announcement also coincides with the arrival of (the Renault group’s) Dacia Spring, which will be made in China, and the ramp up of the electric Twingo, made in Slovenia,” Franck Daout of the CFDT union said in a statement.
Amid tougher EU emissions regulations, carmakers have been switching to battery-powered vehicles, a market dominated by U.S. group Tesla and Germany’s Volkswagen.
The latter is considering whether to start producing electric vehicles in Spain in 2025 at its SEAT division.
Spain will use European Union funds to create a public-private consortium with SEAT and power firm Iberdrola to build its first factory for electric-car batteries.
De Meo said Renault would take part in government-promoted projects to seek EU funds for the automobile sector, but did not elaborate.
$1 = 0.8409 euros Reporting by Joan Faus; Additional reporting by Gilles Gillaume; Editing by Andrei Khalip and Jan Harvey