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Head of State-run Auto Group Resigns; Replacement Is Named

January 21, 1985

PARIS (AP) _ Bernard Hanon, chairman of the struggling state-run Renault automobile group, resigned at the urging of the board of directors, the company announced Monday.

The announcement said Georges Besse, 58, president of the Pechiney metals group since 1982, had been named a Renault director, and observers said they expected him to be named chairman Tuesday by the government-controlled board of directors.

Renault issued a brief statement saying that Hanon, 53, who had been chairman since 1982, would give up his post effective Tuesday. The move was recommended by the board, the statement said.

Hanon’s departure reflects Renault’s poor 1984 results, industry analysts said. With last year’s losses expected to widen to as much as $1.03 billion from $162 million in 1983, Renault is likely to become the biggest loss-maker among France’s nationalized companies.

Renault’s introduction of the much-touted Super-5, an upgraded version of the company’s popular R-5 model, came too late in the year to boost sales substantially, the analysts said.

Delays in launching the Super-5 also allowed rival Peugeot to capture a large sector of the small car market with its new 205 model.

And, once the Super-5 was launched, it did not sell as well as anticipated. Analysts said sales were weak because the new model resembled the old one too closely.

In addition, Renault has suffered from chronic overemployment and weak demand, problems that plague the French auto industry in general.

The privately held Peugeot was able to lay off about 18,000 of its workers. But Hanon ran into stiff opposition when he proposed cutting 9,000 jobs from the nationalized Renault’s workforce.

The proposed job-reduction measures also led to strikes that caused production losses and delayed the introduction of the Super-5.

Rigid government austerity measures provided another problem for the French auto industry last year. Measures designed to reduce inflation also worked to hold consumer buying power and domestic demand at low levels in France, dampening auto sales.

New car sales fell 13 percent from 1983, leaving producers to fight for a shrinking market. Renault’s sales declined 23.1 percent while Peugeot’s fell 10.4 percent and sales by foreign producers slipped 4.3 percent.

The sales decline put a tight squeeze on margins at Renault and Peugeot, which sought relief by asking the government to lift its controls on auto prices. They were rebuffed.

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