Into The Future With Nostra Carlos
Within the Renault-Nissan alliance, Carlos Ghosn must have felt like he was the king. He and Louis Schweitzer were the architects of the fourth largest car making entity in the world. Then the Board of Directors chopped his legs out by vetoing his deal with Roger Penske to supply Saturn with Renault cars and, suddenly, Carlos Ghosn had a very sharp lesson. In the Renault-Nissan alliance, no-one is too big to fail. So when it came to his re-election as CEO, no-one thought it was a cut and dried affair. Well, on Thursday the 29/04/2010, Mr Ghosn received his second term at Renault. And he set out some targets to show the BoD he means business.
Reuters reports that over his next 4 year term, Ghosn envisions the following:
1. The target for 2010 is positive free cash flow. This target shouldn’t be too difficult as Renault owns a hefty 21.8% stake in Volvo trucks. If Ghosn can keep his cool and sell the stake at the right time (the heavy duty truck market is picking up speed after a near death experience) then, the sale should wipe out nearly all of Renault’s debts, enabling more money to flow into Renault.
2. Ghosn cannot see Greece’s problems threatening recovery. This is quite a dangerous prediction as France (which Renault still relies on for a lot of their business) is on the hook for many billions of Euros to Greece. A bailout has been orchestrated with French and German money, two key markets for Renault. However, if Greece can’t sell cuts to public spending to the Greeks (and it’s looking unlikely, given the rioting happening), then the bailout could either be withdrawn, or France and Germany will have to sink more money into Greece. Either outcome will almost certainly affect global markets.
3. Ghosn is to launch a new plan by year-end. Personally, this sounds like jobs will be cut. Lest we forget, Europe has a serious overcapacity problem. And with Opel hanging on for dear life, something has to give. By year-end, Ghosn and the rest of Europe will know whether Opel’s capacity is still sloshing around, or not.
Ghosn has some serious challenges in front of him. And if he doesn’t deliver, the BoD have shown that they will cut him down to size.
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Cammy, don't forget that the discussions centering on Penske buying cars from Samsung with a Saturn badge on the hood were hyped by many parties, least of which IIRC was Renault. The upside to Renault in the deal was to cover Samsung overhead, but the downside was to create a new competitor to Nissan in NAFTA. To me, it was always to be expected that this deal would die. And the "BoD killed-it" was both a reason and cover (for Goshn), much like the salesman blames the manager for all the extra charges in a dealer transaction. Goshn is a pragmatic and realistic operator, if there is nothing there to further his mission at reasonable cost/risk, he's going to be the first one to let it die (think the GM alliance deal.) Is Goshn in trouble? Start with the question of "how replaceable is he", and end it with "how willing is Renault to risk the CEO churning that occurred at Peugeot a few years ago?".
If Renault-Nissan-Samsung wants to sell Korean built vehicles in the US, they should simply market them through the Nissan network. There was very little justification for adding the Saturn brand to the mix.