By Tom Pfeiffer
PARIS, Sept 23 (Reuters) - Renault SA hopes to revive flagging fortunes with the batch of new cars it will display at the Paris motor show this week, but the jury is still out over whether the quirky vehicles will catch on with consumers.
It has been a painful few years for Renault as domestic competitor PSA Peugeot Citroen spewed out a succession of hit designs that gnawed away at its market share just as its own more limited offering started to show its age.
Now Renault Chairman Louis Schweitzer is trying to turn the tables with a raft of unusually-styled vehicles that play up to France's design heritage.
Taking centre stage will be the mid-sized Megane, scheduled to go on sale next month, followed by no less than six spin-offs, which will battle for a combined 14-percent slice of Europe's most lucrative and crowded car segment.
Renault's fortunes may change if people like the Megane, which boasts a bold, angular rear end featuring a curved back window, and the new Espace people carrier, also to go on show in Paris. But analysts say that is far from assured.
"They portray Megane as a vehicle that will probably win good acceptance in southern Europe, but we think it could be a jolt to the system for many northern Europeans," said Adam Collins, analyst at Schroder Salomon Smith Barney.
Last year Renault's core operating profit, excluding its lucrative stake in Japan's Nissan Motor Co , tumbled 77 percent due to ageing products and economic turmoil in key foreign markets, while PSA's jumped 25 percent.
PSA is targeting a 2002 auto division operating margin close to five percent and Renault a two percent overall margin.
The original Megane proved a huge money spinner when adapted as the Scenic minivan, the pioneer of a whole new segment popular with young families.
In 1999, at the height of Megane's success, Renault outclassed its closest European rivals with an auto division operating margin of 5.9 percent.
With its rounded back window, the new Megane takes its cue from the luxury Vel Satis and rarified Avantime coupe, whose futuristic, angular forms are the standard bearers of a bold new image long nurtured by chief designer Patrick le Quement.
The change has been accompanied with commercials featuring fashion designers and models, in a bid to finally shake off Renault's old image as a maker of cheap runabouts for French country folk.
COMPETITION TOUGHER
Megane II, as it is dubbed, also represents a leap ahead in industrial terms, being the first Renault produced using a common assembly system with Nissan, the so-called C-Platform.
Even if Megane II prove a success, say analysts, it will be tough to match the profits Renault churned out with the old Megane Scenic, as competition from PSA, Ford Motor Co and Volkswagen AG becomes tougher than ever.
Analysts said another reason for the uncertainty over profits from Megane II was the generous amount of on-board equipment and lack of information over the car's retail price.
And PSA is not resting on its laurels. Though entering a quieter period for product launches, it will still be showing the future Peugeot 307cc convertible in concept form.
Peugeot wants the car to match the success of the smaller 206cc, which carved itself out a niche with buyers with limited means wanting a reliable cabriolet.
The stylish 307 range, already available as a hatchback and estate, has met with a strong response, though the Megane and new offerings from VW, Ford and General Motors Corp's Adam Opel AG unit will make it an uphill struggle from now own.
MULTI-TASKER
The only new production car sure to appear on PSA's stands will be the Citroen Pluriel, a niche car with echoes of the recent small bubble-shaped C3.
The Pluriel's novel design, with a large retractable sunroof and centre pillars, means it can be converted from a saloon into an open-topped cabriolet or a "Spider Pick-Up" with a rear flat space for loading and carrying long and awkward objects.
Though the 307cc and Pluriel are largely low-volume products, PSA isn't going to take Renault's product offensive lying down, and is clearly planning replacements for its big-volume Citroen Saxo and Xsara and Peugeot 406. "It's not nice when you arrive at a show without a major model appearance and your competitor steals the show," Collins at SSSB. "But next year we think there'll be quite a lot happening for Peugeot."