One in, all in – Ghosn’s tip for industry revamp

CAR-MAKERS in Europe will all rush to restructure their businesses if one company is forced to do it by financial necessity, according to Renault-Nissan Alliance CEO Carlos Ghosn.

Mr Ghosn also predicted that more motor company alliances would be formed as those companies battled to drive down costs and stay competitive.

He said some of the alliances would fail because they would not “walk the talk” as Renault and Nissan had done in their successful partnership that he said had been built on “absolute respect”, even though it had been born in an hour of desperation to save Nissan.

Mr Ghosn was speaking at the Geneva motor show, where the Renault-Nissan Alliance unveiled a swag of new models including the all-electric Renault Zoe, Nissan Hi-Cross SUV concept and Infiniti Emerg-e range-extender hybrid sports coupe.

He described his company’s partnership as “an absolute book case” on how to create a successful partnership, driven by need and based on mutual respect.

Although he did not name rivals PSA Peugeot-Citroen and General Motors – companies that announced a co-operative deal last week – Mr Ghosn was clearly alluding to them when he said more alliances would be formed, for good or bad, with good or bad results.

From top: Nissan Hi-Cross and Invitation, Infiniti Emerg-e and Renault Zoe.

He said such alliances needed to respect the geography, culture and needs of each party, and first consider the benefits of each step.

Mr Ghosn was probably pointing to GM’s troubled European operation, Opel-Vauxhall, when he spoke of the potential for one company to change the European motor industry by restructuring.

He said no company wanted to restructure because of the pain of closing factories and making other tough changes.

“Nobody is motivated by cut-cut,” he said. “That does not lead to win-win.” Mr Ghosn said only a company with no viable alternative would take the step to restructure.

“It is not about leadership it is about who needs it most,” he said.

Mr Ghosn, who guided Nissan’s rescue after the Japanese company descended towards bankruptcy in 1999, said Renault-Nissan was doing its restructuring “by the second-best way” – slowly and carefully rebuilding its operations.

“But the day somebody in Europe restructures is the day everybody will do it,” he said. “Everybody will be forced to follow.” Mr Ghosn indicated this would be necessary so that under-pressure European motor manufacturers could stay competitive.

Faced with struggling sales, high costs and over-capacity, many European car-makers such as Opel would like to restructure, but the difficulty of doing so in an environment where worker organisations and local governments have such a hold over factories makes it extremely difficult.

Mr Ghosn said that, ironically for global manufacturers, the decline of Europe as a percentage of the world market, falling from about 30 per cent to as low as 15 per cent, meant the problem of European inefficiency was becoming less of an issue anyway.

“Little by little, the problem is going to solve itself,” he said, adding that the rise of markets such as China, India and Brazil was offsetting the European decline.

Mr Ghosn confirmed that Renault would make another attempt to re-enter the luxury end of the market after previously “losing our shirt” in high-end sales.

He said that, while Renault made money on low-end sales, other companies made big profits on their luxury entrants while losing on their cheaper cars.

A new Renault luxury car built on a Mercedes-Benz platform would spearhead this renewed attempt in the luxury market, he said.

Mr Ghosn pointed to the co-operation with Daimler as proof that the Renault-Nissan Alliance had worked, as otherwise Daimler would not want to get involved.

He said it was likely that Renault-Nissan would enter into other alliances with third parties where it suited both companies.