Israel to Produce Own Autos; Spurred by Renault’s Withdrawal

Within the next two years Israel-made automobiles, assembled at the Kaiser-Frazer plant at Haifa, will be exhibited throughout the world as a result of the cancellation of operations in Israel by the French auto firm, Renault, representatives of the press were told here today by Ephraim Illin, manager of the Kaiser-Frazer plant.

Mr. Illin said that while the Renault decision was a “severe blow,” he hoped that the action would lead to production of an all-Israel compact car soon. He quoted Finance Minister Levi Eshkol as telling him that “the Arabs closed ports–we opened new ports; the British refused to give certificates for immigrants–we built a state and opened the doors; Renault is discontinuing to supply parts–Illin, go and construct Israel cars.”

Mr. Illin said that the Kaiser-Frazer company, in which American investors hold the majority of shares, would bring to the attention of “enlightened Jewish and non-Jewish opinion of the whole world” the facts in the “capitulation to the Arab boycott” by Renault. The French firm has insisted that economic factors, such as taxes and high production costs, were the decisive considerations in the decision to halt Israel operations.

The Kaiser-Frazer company here plans to start a $2,000,000 suit for damages, against the Renault firm in Paris for breaking its contract. One-third of the Kaiser-Frazer plant’s capacity was used for Renault assembly.

ISRAEL’S CABINET TO DISCUSS RENAULT CASE; FACTORS ANALYZED

While talks on the Renault case were scheduled in the Foreign Ministry in preparation for a discussion at Sunday’s Cabinet meeting, there was a tendency in Israel official circles today to play down implications that the Renault firm had bowed to the Arab boycott. Three factors were considered involved in the Renault decision. These were suggested as the Arab boycott, French foreign politics and Renault’s profits.

It was believed that without the boycott pressure, the cancellation would probably have not taken place and that even under boycott pressures, the operation would have been continued if profits to Renault were substantial. In fact, it was understood, the profits were small, particularly in comparison to the Arab market.

Observers suggested also that even the boycott and the limited profits would not have led to cancellation if the French Government wanted the Haifa operations to continue. But there evidently was no such wish, a fact related to French efforts to improve relations with President Nasser of the United Arab Republic as part of the bid for an Algerian settlement.

What Israel officials particularly resent it was reported, was the manner in which the Renault closedown was carried out. Kaiser-Frazer officials were given reason to believe that the operations would continue after the decision to cancel had been taken.