2006 Detroit Auto Show, Part VIII by Bengt Halvorson (1/9/2006)
Jeep Compass, Toyota Camry, Nissan Sentra and Urge.
Just as he did at Nissan, Carlos
Ghosn is planning to use a new product offensive to boost the fortunes of
Renault with a combination of judicious cost-cutting and a move upmarket.
At the same time, Ghosn also is
ordering Nissan to move deeper into the commercial vehicle market and to
maintain a close watch on costs, including those in
At Renault’s annual press
The new product offensive also is
designed to reduce Renault’s dependence on the Mégane compact. “This heavy
dependence on a single product is a source of vulnerability for the company,”
Ghosn said. Ghosn also ruled out any attempt by Renault to enter the North
American market before 2009.
Ghosn faces a big challenge moving
Renault back into the limelight. The one big difference between Nissan and
Renault, however, is that Ghosn is starting from a position of relative
strength. The goal to boost sales was announced after Renault posted a
19-percent increase in net income. Most of the increase came from a 35-percent
boost in Nissan’s contribution to Renault. Without the increase in Nissan’s
contribution, Renault’s net income would have dropped 16 percent, according to
the figures provided in a year-end financial report. Renault revenue grew only
1.3 percent in 2005.
Nevertheless, with $3.9 billion in
profit in the bank, Ghosn was able to sidestep a showdown with Renault’s
hard-nosed unions. Since the company is planning to sell an additional 800,000
vehicles before the end of the decade, there is no need for layoffs, Ghosn said.
At Nissan Ghosn eliminated more than 20,000 jobs in his effort to make the
Japanese automaker profitable again.
Renault, like other European
automakers, faces a host of challenges, including intense competition, higher
prices for basic materials and the extra costs from a new wave of EU safety and
environmental standards. Meanwhile, most forecasts, from inside and outside the
auto industry, expect demand for new vehicles to be relatively flat across
Ghosn also is promoting closer
cooperation with its alliance partners. Thus, South Korea–based Renault Samsung
Motors is developing sport-utility vehicles and crossover models for
distribution in other Renault markets, he said.
Just last week, Nissan announced
plans to supply a light truck built in