Renault Senard: change of focus in automotive alliance sales

PARIS – The automobile alliance between Renault, Nissan Motor and Mitsubishi Motors will review its goal of selling 14 million cars worldwide by 2022, said Renault President Jean-Dominique Senard, stating that the efforts of former chief Carlos Ghosn would be abandoned. ladder.

"In the coming months, we will redefine the objective based on confirmed elements," said Senard in a joint interview with Nikkei and the French newspaper Le Figaro.

The changes come as the alliance between the company and the Nissan group faces a slowdown in sales in China and the United States, the two largest automotive markets in the world.

Since taking office Jan. 24, the former Michelin tire manufacturer CEO was eager to bridge the gap that had been created between French and Japanese builders after Ghosn's arrest in Japan in last November for financial misconduct. Senard also took the lead in a new decision board for the launch of the alliance at the end of March.

The Renault-Nissan alliance was created in 1999 to ensure the survival of the struggling Japanese manufacturer. After Nissan's reorganization was completed, Mr. Ghosn became the Renault and Nissan leader in 2005. In this role, he sought to maximize economies of scale by sharing production centers and standardizing parts. between car manufacturers. Alliance sales surpbaded 10 million euros after Nissan brought Mitsubishi into the fold of investment in 2016.

Nissan was rebuilt as part of the noble goals envisioned by Ghosn. The medium-term plan of the three automakers aims to increase combined annual sales by 40% compared to 2016, reaching more than 14 million vehicles in 2022, bringing annual synergies to 10 billion euros (11, $ 3 billion). These aggressive targets, however, began to weigh heavily on the alliance.

The concentration of the alliance on global sales has led Nissan to neglect investments in Japanese factories and personnel, which has caused a scandal about inappropriate vehicle inspections. At the same time, Nissan's profits have been negatively impacted by declining profitability in North America, which must primarily increase its market share. The alliance is likely to degrade its sales target given Nissan's difficulties in the United States and China.

Senard admitted that the French government, Renault's largest shareholder, urged him to make his alliance with Nissan irreversible – though this is not necessarily the case.

"I have no worries about [government] interference in terms of freedom, I must do what I have to do, "he said, adding that his priority was to improve the effectiveness of the alliance. would understand his position not to rush a possible merger.

"If we reduce the alliance to a lot of synergies, it's good, but it will not do much to engage our teams," Senard said. "We must redefine the purpose of the alliance."

Without directly criticizing Ghosn, Senard called for a return to the founding philosophy of the alliance, "which involves taking into account respect for cultures and businesses and working together to maximize efficiency."

Nissan and Renault have expanded the number of areas in which they work together on the premise that both sides benefit, such as the collective purchase of parts to reduce costs.

But in recent years, under the leadership of Mr. Ghosn, "the collaboration in order to achieve the numerical goals of the alliance has increased excessively," said a Nissan executive .

Take, for example, the decision to transfer production of Nissan's compact Micra car from India to a Renault factory in France. "The impact on Nissan has not been sufficiently taken into account," added the executive.

Mr. Senard said, "I am not dealing with the issue today, if I were talking about a merger, it would be to talk about the intelligent fusion of our cultures to make the alliance very effective. All others would not be relevant. "

The French government holds 15% of Renault's capital and appoints directors to its board of directors. He intervened in the appointment of the management of Renault and may require a faster merger.

"All shareholders have the freedom of speech, but when there is a person with a mandate, you must let her finish her term until the end," Senard said. "I had no difficulty understanding this point."

Senard is also expected to become Nissan's director at the automaker's extraordinary shareholder meeting on April 8 and vice chairman at the June regular shareholders meeting.

"I will not sit down and listen to what others are telling me" at Nissan, he said, adding that the economic future of the alliance was at stake.

Nissan's net profit is expected to fall 45 percent to 410 billion yen ($ 3.68 billion) for the fiscal year through March. Renault derives approximately half of its net profit from Nissan.