Biz Watch

Let the Car Wars Begin
Talk about shifting gears. After a disastrous foray into the luxury auto market, on June 2 Renault will roll out its latest small model, code named the X90. Base price: just €5,000. Its target consumers are aspiring car owners in Eastern Europe, Latin America and the Middle East who can't afford even the lowest-end models.

"The appetite for automobiles around the world has not diminished," says chief executive Louis Schweitzer, who expects sales to reach 700,000 by 2010. To keep costs low, Renault is producing the X90 in Romania and plans to add plants in Russia, Morocco,

INDICATORS Crowded Skies Shares in easyJet, Europe's second-largest no-frills airline, plummeted 25% despite the U.K.-based carrier almost halving losses. EasyJet said "unrealistic" pricing by competitors made it cautious for the coming year. Engine Trouble Police arrested seven former executives of Japan's Mitsubishi Motors on suspicion of covering up truck defects that led to a fatal accident in 2002. All but one of the suspects deny the charges. Counter Revolution Chicago's city council delayed Wal-Mart's plans to open its first two stores in the city, a month after voters in a Los Angeles suburb rejected the store's efforts to set up shop.

Colombia and Iran. Rivals are close behind: Peugeot Citroën and Kia plan to build low-cost cars in Slovakia, Fiat's producing Pandas in Poland and VW will begin importing its Fox from Brazil.

"It'll be a bloodbath," says Harald Hendrikse, auto analyst at Credit Suisse First Boston, who adds: "I have yet to be convinced that these tiny little cars will make a lot of money." Schweitzer insists the X90 will be profitable. But even so, it could cannibalize sales of pricier small cars, such as Renault's Clio.

Banks Bouncing Back
Is a recovery under way for Germany's long-suffering banking sector? Last week Dresdner Bank, which was acquired by the insurance giant Allianz in 2001, reported a first-quarter operating profit of €170"We need an institution in Germany that is globally competitive," Schröder said. "Better would be to have two." His words have a nicer ring in German, but everyone knows what he means. — By Charles P. Wallace

Getting A Head
In the first ever hostile bid for a major Chinese firm, U.K.-listed SABMiller, the world's second-largest beer manufacturer, launched an unsolicited $550 million offer for China's Harbin Brewery, just days after U.S. rival Anheuser-Busch took 29% of the Chinese firm.

The Bottom Line
	It is not a right of the state to help its industry. It is a duty.
		NICOLAS SARKOZY, French Economics, Finance and Industry Minister, vowing to fight the breakup of the country's beleaguered engineering firm, Alstom