RENAULT says its Japanese partner Nissan will manufacture the next generation subcompact Micra model at a factory in France, just a month after reaching a wage and working hours deal with French employees.
The new Micra will be manufactured at the Renault plant at Flins, near Paris, from 2016 with output reaching 82,000 vehicles per year, the companies said in a statement on Friday.
France's Industrial Renewal Minister Arnaud Montebourg said the deal "was just the beginning for Renault in France and towards (products) made in France".
Renault said the labour pact signed last month increased "the competitiveness of its French plants, and enabled the company to assign the new Nissan production to the Flins plant".
Renault's management had pushed strongly for the labour deal with unions, arguing wages and working hours needed more flexibility if car manufacturing in the country was to survive the severe downturn in the European car market.
The deal is also in line with new labour market flexibility measures that are set to become law next month and which the French government hopes will boost employment and restart stalled economic growth.
"This announcement is good news for Flins, but also for all Renault plants in France," said Renault Group chief executive Carlos Ghosn. "The efforts committed by our employees under the Renault Agreement are beginning to bear fruit."
Renault's pact with unions will see wages frozen in 2013 and working hours increased, but in return, the company has pledged to keep all of its five plants in France open until the end of 2016.
Although it plans to cut 7,500 jobs in France, those will be made through natural attrition and early retirement.
Under the deal with Nissan, the French automaker is committed to ramp up its annual production volume by 180,000 cars in plants in France to 710,000. In that increase, 100,000 of the cars will be new Renault products, and the remaining 80,000 will come from partners.
A Renault spokesman told AFP that "other opportunities may present themselves (with the partners) that we won't fail to study".
Patrick Lienard, an FO union official at the Flins plant, said other announcements are soon expected to follow "for the two other sites".
There has previously been talks about producing Nissan Primastar vans at a plant in Sandouville.
Another union representative, Bruno Mathiez of the CFE-CGC, called the announcement "excellent news that we didn't expect that early. This proves that Nissan has confidence in us following the agreement".
Nissan, which has its own European manufacturing sites in Britain, Russia and Spain, said these would soon be at full capacity and it had looked for options within its alliance with Renault.
"The decision to propose the vehicle to Renault to build at one of its European plants benefits Nissan in several ways including capital expense reduction, foreign exchange exposure reduction and working capital reduction through shorter supply chains," the company said in a statement.
Renault, which also owns Dacia and Samsung brands, still managed a net profit of 1.77 billion euros ($A2.25 billion) last year as it is less dependent on the European market, where its sales dropped by 18 per cent last year.
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