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Renault and Volvo to break off distribution pact

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PARIS (AP) _ French carmaker Renault SA said Friday it has agreed with Volvo Cars, a subsidiary of Ford Motor Co. (NYSE:F), to not renew a distribution agreement when it expires at the end of next year.

Starting Jan. 1, 2008, Renault will establish its own subsidiary to distribute its vehicles and spare parts and provide after-sales services in Sweden, Norway, Finland and Denmark. Renault said it would retain the existing dealer network in those four markets for the sale and servicing of Renault cars and light commercial vehicles.

The distribution of Renault cars and light commercial vehicles and spare parts, as well as Renault after-sales services in the Nordic countries, had been done by Volvo Cars through a network of dual-branded, Volvo-Renault dealers.

Renault sold more than 30,000 cars in the four Nordic markets last year, compared with just 6,500 in 1982 when the initial distribution agreement came into effect.

The most recent renewal of the importer agreement between the two manufacturers was in 2003, for a period of five years.

The decision to end the arrangement won't affect Renault customers, the company said.

Renault said the decision to set up its own distribution network is part of a program crafted by its chairman, Carlos Ghosn, and aimed at increased profitability through cost-cutting, quality and the group's product line.

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Renault and Volvo to break off distribution pact
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