BRUCE GAIN

Ghosn has 'his wings clipped'

Bruce Gain is the France correspondent for Automotive News Europe.Bruce Gain is the France correspondent for Automotive News Europe.
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Renault CEO Carlos Ghosn will play a more hands-on role in reviving the brand in Europe, while ceding to domestic pressure to keep car production in France, following Carlos Tavares' appointment as the French carmaker's new chief operating officer.

Ghosn has his work cut out for him considering that sales visibility for the Megane, Clio, and Twingo models this year is poor while Renault is embarking on a very risky venture to become Europe's top seller of electric cars with several billion euros at stake.

As the price of winning French government support for Tavares' appointment, Renault will invest more in its production in France, despite the country's high labor costs. The government owns a 15 percent stake in Renault and has two board members.

On Monday, Renault said that "permanent improvement in competitiveness and the development of sites in France will be a priority." The statement was a U-turn compared with Renault's recent decisions to invest in production of its best-selling Megane and Twingo models, as well as some production of its Clio, outside of France.

Ghosn seems to have survived the carmaker's espionage affair when he was forced to reinstate three top managers falsely accused of leaking secrets about the company's EV plans. But Ghosn has also emerged weaker with the appointment of Tavares, previously head of the Americas region for Nissan, as his new head lieutenant to replace Patrick Pelata who quit as COO for his handling of the spy affair.

"Between the lines it appears clear that Ghosn has had his wings clipped in the wake of the spy scandal and that state influence is on the rise at Renault," Morgan Stanley wrote in a note to investors. They added: "Tavares' appointment looks to have been rubber-stamped by the government only once Renault committed to certain production levels in France."

Ghosn told Le Parisien that he will "devote more time to Renault and will from now on be more present in France." As Nissan's CEO as well as Renault's, Ghosn travels back and forth between Paris and Tokyo.

Ghosn highlighted the hands-on steps he will take to strengthen Renault's role in the Renault-Nissan alliance in his interview in Le Parisien. Specifically, he said he would "personally take charge" of several projects, such as invigorating Renault's high-end brands. Renault's Laguna, and more recently, the Latitude, have largely been disappointments, especially outside of France.

Russia's leading carmaker Avtovaz will become a direct subsidiary of Renault, instead of folding it under the umbrella of the Renault-Nissan alliance, Ghosn said in the interview.

China, where Nissan has made inroads while Renault has barely established a presence, will be "a priority" for Renault, Ghosn added.

Ghosn certainly has his work cut out for him. Faced with brand reliability problems, weakening sales in Europe, extreme competitive pressures in domestic markets and aboard, high labor costs in France, and a very long and expensive bet on EVs, the odds are long indeed that he can make that much of a positive impact in the near term.

You can reach Bruce Gain at bgain@crain.com.

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