Ghosn: Need for scale will drive more deals
Carlos Ghosn: As automakers confront global changes, size is a key weapon.
Photo credit: JOE WILSSENS
DETROIT -- Size matters to Carlos Ghosn, CEO of the Renault-Nissan Alliance.
His global auto juggernaut, which reported record sales of 8.03 million last year, is still on the prowl for more strategic partners. And he says tie-ups are critical to growth.
"We are an industry that needs scale," Ghosn said at the Automotive News World Congress. "And because we are an industry of scale, we are going to have to work together.
"Scale is going to support talent. Talent alone is not going to make it."
Ghosn, 57, said Renault-Nissan's 2011 sales tally gives it comfortable scale, but gaps still exist in its global coverage. Talking on the sidelines of the World Congress, he cited India and Southeast Asia as areas ripe for further collaboration.
And he warned that the bar for automotive economies of scale keeps rising.
"The 4 million threshold became 6 -- and from 6, then 7 and 8," Ghosn said. "When you're selling 8 million cars, you don't have problems of scale."
Renault-Nissan sales climbed 10 percent in 2011. The figure includes 4.67 million vehicles for Nissan, 2.72 million for Renault, and 638,000 for their Russian partner AvtoVAZ. Ghosn predicted another year of record sales in 2012, with Nissan doing the heavy lifting.
"I'm foreseeing another record for the alliance in 2012," he added.
Ghosn said size is a key weapon as automakers confront global changes.
Exploding populations and increasing wealth in developing countries are spurring unprecedented demand for cars and the fossil fuels that power them, he said. That will require automakers to spend more on new technologies to improve fuel economy, reduce emissions and slash manufacturing costs.
To cope, rival automakers must increasingly pool resources and share investments, he said. The catch is that many partnerships, such as the ill-fated Daimler-Chrysler tie-up, don't make it.
"The 12-year-old Renault-Nissan Alliance took a different approach, one that preserves brand integrity and corporate cultures," he said. "Amid a graveyard of failed combinations in the past 15 years, we have built the longest surviving major cross-cultural partnership in our industry."
His company has built on that bond with other ties-ups with Dongfeng in China, AvtoVAZ in Russia and Daimler in Western Europe and North America. On Jan. 8, Nissan said that in 2014 it would start making gasoline engines in Tennessee for Daimler and the Alliance.
Ghosn's confirmation that his Alliance has crossed the 8 million mark came as Sergio Marchionne, CEO of Fiat S.p.A. and Chrysler Group, told reporters in Detroit that he thinks successful global automakers need to make at least 8 million vehicles a year.
In a nod to Ghosn's strategic partnership mantra, Marchionne said Fiat could welcome a third partner before any initial public offering of its Chrysler unit as his company chases global sales of 5.9 million vehicles in 2014.
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