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Renault’s Ghosn Pledges 'Irreversible' Nissan Alliance

Feb. 16, 2018
A new plan to boost efficiency at the partnership will be unveiled in the next few weeks, said Ghosn, who agreed Thursday to stay on as Renault chairman and CEO for the next four years.

Renault SA’s Carlos Ghosn pledged to cement the French automaker’s partnership with Nissan Motor Co. and Mitsubishi Motors Corp. after agreeing to stay on as chairman and chief executive officer for the next four years.

The companies will come up with a plan “make the alliance irreversible,” Ghosn said Friday after Renault reported record annual revenue and profit. A new plan to boost efficiency at the partnership will be unveiled in the next few weeks, Ghosn told reporters at the company’s headquarters near Paris.

Ghosn’s reappointment, announced late Thursday, put to rest weeks of speculation about Renault’s leadership and ensures the longtime CEO will continue to steer the company through a potentially jarring technology transition. France, a top shareholder, had demanded a pay cut, succession planning and deeper ties with Nissan that can outlast Ghosn’s tenure.

Renault named a second-in-command to Ghosn, who will free the busy executive to focus on strengthening the alliance. Thierry Bollore, the company’s chief competitive officer, was named chief operating officer, putting him in line to succeed his 63-year-old boss.

Record Year

Renault rose as much as 4.7% after the company reported operating profit rose 16% last year to 3.8 billion euros (US$4.8 billion), beating the 3.6 billion-euro average of analysts’ estimates compiled by Bloomberg. Revenue jumped 15% to 58.8 billion euros as demand for cars continue to expand in Europe, the company said in a statement. Renault’s AvtoVAZ, which sells Lada cars, is also benefiting from an improvement in Russia.

The shares were up 2.5% to 88.19 euros at 9:33 a.m. in Paris, giving Renault a market value of 26.1 billion euros.

France’s backing for Ghosn is a turnabout from three years ago, when the two were at loggerheads over the state’s level of involvement in the company. Ghosn lost a clash with then-Economy Minister Emmanuel Macron over whether France and other long-term shareholders should have double voting rights. Ghosn argued in favor of one share, one vote, while Macron said the state deserved a greater say.

‘New Era’

His new mandate reflects the priorities of France, which owns a 15% stake. Ghosn will continue to focus on the carmaker’s strategic plan, called Drive the Future, aimed at guiding the carmaker through industry shifts as more stringent pollution standards, electric vehicles and self-driving technology take hold. Government officials also demanded Ghosn take a 30% pay cut.

“We want to build new era of relations between Renault and state,” French Finance Minister Bruno Le Maire said on C-news TV.

France supported a renewed mandate for Ghosn, while backing the nomination of Bollore, 54, a French citizen who started his career with the tiremaker Cie Generale des Etablissements Michelin.

French officials’ goal of installing a second-in-command at Renault with the managerial and international clout to succeed Ghosn “has been achieved with the appointment of Thierry Bollore,” analysts at Bryan Garnier said in a research note.

Ghosn saved Nissan from near-collapse almost two decades ago and spearheaded the globalization drive that now unites carmakers from across continents. He remains chairman at all three companies, after giving up the CEO job at Nissan. He’s been CEO at Renault since 2005, and oversees the three-way alliance as well.

French Exit?

The new structure could also give the French government political cover to reduce its stake, ultimately making a full merger of Renault and Nissan “a very real possibility,” Evercore ISI analyst Arndt Ellinghorst said in a note this week.

Ghosn said Friday any change in the financial structure of the Alliance would have to be approved by both the French and Japanese governments. He added that Japan would not agree to a tighter structure if France remains a shareholder.

Ghosn said a year ago there would be no merger between Renault and Nissan as long as the French government is a shareholder. France raised its stake in 2015, while Macron, who is now president, was economy minister. The state has no plan to sell Renault shares, a government official said this week.

By Ania Nussbaum

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Licensed content from Bloomberg, copyright 2016.

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