Renault Shelves Plan for Mercedes-Based Luxury Car

Renault SA tells The Wall Street Journal it has suspended plans to develop a large luxury sedan based on Daimler AG's Mercedes-Benz E-Class platform.

"We haven't found a business model that works," COO Carlos Tavares tells the newspaper.

Tavares says the project was scotched, at least for now, by an inability to resolve product cycle-related sourcing, logistics and assembly issues. Another Journal source says the car would have been based on the current E-Class, whose technology Daimler plans to update at about the time the Renault model would have debuted.

The planned luxury car was to be priced above $65,000, according to the Journal. It says Renault will instead focus on updating the top end of its existing lineup, currently led by the $46,900 Espace MPV.

Renault will roll out a replacement for the Espace next year and follow it with new hatchback and crossover models. The company also plans to introduce upscale versions of several existing models under the "Initial Paris" marque, Tavares says.

Renault and partner Nissan Motor Co. formed an alliance with Daimler three years ago to co-develop cars, engines and drivetrains. The companies are pursuing 10 such projects, none of which is affected by Renault's luxury car decision. One of them, a premium compact sedan for Nissan's Infiniti brand, is expected to the introduced in Europe in 2015.