RNO Renault SA

Renault SA (RNO.FR) confirmed Thursday that it's working on a plan to build a vehicle assembly plant in Algeria as a way to avoid high import duties.

"It's just a project. Nothing has been concluded," Renault Chief Operating Officer Patrick Pelata told journalists on the sidelines of a presentation of Renault's 2009 results. However, "the discussions are well advanced," he said.

Building an assembly plant isn't a viable option for most car makers because their sales volumes in Algeria don't warrant such an investment.

"But we have 25% of the market," Pelata said.

The cars won't be exported from Algeria, he said.

According to a recent French press report, Renault wants to build a plant on the outskirts of the capital Algiers to assemble its Sandero and Logan low-budget, no-frills cars.

The report said Renault would have a 49% stake in the venture alongside state-owned SNVI, and would have operational control of the facility.

Renault sold 56,000 vehicles in Algeria last year, including 39,000 cars bearing the Renault badge and 17,000 Logans and Sanderos made by its Romanian subsidiary Dacia.

-By David Pearson, Dow Jones Newswires; +33140171740, david.pearson@dowjones.com

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