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GM Looks At Engine Plant; Renault Selling Electronics Firm

June 25, 1985

DETROIT (AP) _ Renault, the financially troubled French carmaker, said Tuesday that it plans to sell its interest in an automotive electronics company and is discussing a business deal at its Mexican engine plant with General Motors Corp.

Renault said it was selling its 51 percent interest in Renix Electronique SA of France to U.S.-based Allied Corp., which had owned the other 49 percent and is a major auto industry supplier. The price wasn’t disclosed.

Renix makes electronic ignitions, fuel-injection systems, electronic automatic transmissions and engine sensors. Set up as a joint venture, it will become part of the Allied unit Bendix Electronics and Engine Controls, the companies said.

Concerning Mexico, Renault said it was holding talks with GM about its engine plant in Gomez Palacio. Renault generally is understood to be seeking either an investment by GM to spread the amortization burden of the plant’s cost or a deal in which GM would buy engines from the plant.

Renault’s plans had called for production of 450 car engines daily by the end of this year with 80 percent exported to Kenosha, Wis., where American Motors Corp. makes Renault-designed Alliance and Encore subcompact cars.

However, the cars have suffered a sharp drop in sales, cutting demand for engines.

Renault owns 46 percent of AMC and 40 percent of Mack Trucks Inc. of Allentown, Pa. The French company didn’t mention those two manufacturers in its statements, released in Detroit and Paris.

GM spokesman Ronald Theis confirmed that the Mexican talks had been held but said they were ″in a preliminary stage.″ Without elaborating, Theis said a ″business arrangement″ between Renault, AMC and GM was possible.

The future of the $400 million plant will be a key element in the financial recovery of the French carmaker, which lost $1.3 billion in 1984.

The Jeep complex in Toledo, Ohio, is AMC’s most profitable unit and employees there have said recently that Renault might use it to raise cash. However, AMC President Jose Dedeurwaerder has said repeatedly that Jeep isn’t for sale.

A Renault official, speaking on condition that he not be identified by name, said the company has ruled out closing the Mexican plant, saying ″such a move would end up being more expensive than keeping it operating.″

However, AMC has threatened to close the Kenosha car plant and a parts plant in Milwaukee if the United Auto Workers union doesn’t grant major concessions to lower labor costs. Labor talks are being held this week in Milwaukee with a company-imposed Friday deadline for an agreement.

Renix, headquartered in Toulouse in southern France, lists four plants and 900 employees, including 135 engineers and technicians.

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