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UPDATE 3-Lagardere, Renault give up on Avantime car

(Recasts, adds Renault comments, details)

By Rebecca Harrison

PARIS, Feb 26 (Reuters) - France's Lagardere said on Wednesday it was halting production of Renault's Avantime car, ending decades of involvement in the car business and torpedoing Renault's boldly designed luxury car.

The decision by Lagardere, whose Matra Automobile unit assembled the Avantime for Renault, ends the media firm's automobile business after decades in which it sold sporty cars to French consumers and captured racing titles.

In a statement it called the Avantime a "commercial failure" and said the decision to end production "drives Matra Automobile to end its activity in auto construction."

An industrial source said the move also marked the end of Lagardere's attempts to sell its car assembly unit, which employs about 900 workers.

In January, Lagardere said it was in talks with several potential buyers for the unit including Germany's Albert Weber, but the source said that since then the talks had failed.

The decision dashes French car maker Renault's hopes for the Avantime, which was launched in October 2001 amid expectations it would find a niche among the young and wealthy. Some 5,000 have been sold so far, well short of the company's aim to sell 10,000 a year.

"We will not take over production. A transfer of these facilities was considered out of the question because of the cost," a Renault spokesman told Reuters.

He also said the Avantime was based on outmoded technology and that it would take too long to restart production in new factories.

DISAPPOINTING SALES

Lagardere said that in December orders for the Avantime averaged only 15 per day, and that despite a marketing drive and launches of other models in the same range, sales were well below target.

Last year Renault took back production of its Espace van from Matra, leaving the Lagardere unit with only the Avantime coupe to make at its plant at Romarantin in central France.

Lagardere earlier this week sold its 1.26 percent stake in Renault and Lagardere chief Jean-Luc Lagardere quit the Renault board last week.

Despite the split, both companies said they would honour service contracts with Avantime and Espace clients. Lagardere said it would also do its utmost to preserve jobs at its Matra factories.

The quirky Avantime was the flag bearer of Renault's bold new take on design that spawned the new love-it-or-hate-it Megane and the Vel Satis hatchback luxury saloon.

Lagardere has assembled a number of vehicles for Europe's fourth-largest carmaker through Matra. It had hoped to sell the division by the end of last year.

Lagardere was for years an aerospace and engineering group that also owned a magazine business, but has been metamorphosing into a pure media group in recent years under the direction of Jean-Luc's son Arnaud Lagardere. (Additional reporting by Jean-Michel Belot)