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Last Updated: Thursday, 28 April 2005, 20:30 GMT 21:30 UK
Renault-Nissan emerges as global giant
By Jorn Madslien
BBC News business reporter

The 50-year-old chief executive of the world's ninth largest car maker, Nissan, is about to add another string to his bow.

Louis Schweitzer and Carlos Ghosn
Mr Ghosn (right) and Louis Schweitzer, the man who helped him reach the top

On 29 April, Carlos Ghosn also becomes chief executive of Renault, which ranks tenth.

Mr Ghosn will preside over the increasingly powerful Renault-Nissan Alliance, which sold almost six million cars in 2004, and which aims to sell closer to eight million by 2010.

"It's going to require a lot of work, but I'm very confident that the quality of the people around me is going to make the difference," Mr Ghosn tells BBC News.

Parallel success stories

Renault owns a 44.4% stake in Nissan, while Nissan owns 15% of Renault.

Yet the alliance falls short of a merger that would have elevated it to the number four spot worldwide, behind General Motors, Toyota and Ford; ahead of Volkswagen and DaimlerChrysler.

That, however, is hardly the point.

World's leading car makers
Nissan Navara
General Motors
Renault-Nissan Alliance

What is crucial is that both companies are in rude health, having undergone major surgery in recent years.

As recently as 1999, Nissan crashed and burned, with debts of $22bn, only to be snatched out of the ashes at the last minute.

Mr Ghosn was parachuted in by alliance partner Renault on the orders of the French car maker's chief executive Louis Schweitzer.

A hatchet man dubbed 'le cost killer', Mr Ghosn pushed through a swift and savage turn-around that lifted Nissan back into the black by 2001.

He then went on to revolutionise its models, thus lifting sales to 3.3 million cars in 2004 - in part thanks to success in the crucial US market.

In parallel, Renault was transformed under Mr Schweitzer from an inefficient and inward looking car maker controlled by the French state, to a privatised and internationally focused producer of cars that have proven to be both desirable and profitable.

Sales under Mr Schweitzer, who will stay on as non-executive chairman of Renault, rose from 1.8 million cars in 1997 to 2.5 million in 2004. The figures are expected to continue heading higher - despite a slight slowdown in recent months - largely thanks to Mr Schweitzer's push into emerging markets.

Renault expects to sell a million a year by 2010 of its budget Logan family car, which is produced in Romania, India and Russia. By then, the Logan should account for about a quarter of the French car maker's total sales.

Renault has also formed a joint venture with the Indian car maker Mahindra to sell its Scorpio sports utility vehicle in Africa.

Active chief executive

Moving forward, closer integration between the two companies is expected to spark fundamental changes.

Ghosn's giant
Carlos Ghosn, chief executive of Nissan Motors
Nissan is the world's ninth largest car maker, Renault the tenth, in terms of unit sales
Carlos Ghosn is to become chief executive of both
The alliance commands a 9.6% global market share
Renault holds a 44.4% stake in Nissan
Nissan holds a 15% stake in Renault
For starters, the hands-on Mr Ghosn has vowed to delegate more.

"I'm going to spend 40% of my time in Tokyo, 40% of my time in Paris and 20% in the rest of the world," the Brazilian-born, French-educated son of Lebanese parents says.

"It means that I'm going to be relying more and more on very carefully selected people reporting to me."

Moreover, after years of operating at arms-length distance, the two companies are expected to go through a process of rapid integration.

"Both companies, I think, are expected to generate more dynamic synergies under one chief executive," says Nissan's chief operating officer Toshiyuki Shiga, who is taking over as head of Nissan's day-to-day operations in Japan.

So although the two companies will remain separate, autonomous units, savings are to be achieved through the creation of jointly owned distribution subsidiaries in a range of European countries, as well as by a cut-back in the number of suppliers delivering parts to both firms.

There are even rumours of a plan to transfer production of the Nissan Primera from Sunderland to Renault's French Laguna factory in Sandouville - though company officials insist that such strategies would be exceptions rather than part of a mainstream strategy for the alliance.

Commanding respect

The car industry is eagerly watching as Mr Ghosn embarks on a challenge unlike any tried before. Never previously has one person been in charge of two large volume car makers.

Renault Logan
The budget car Logan helps Renault penetrate emerging markets

Few dare predict a flop. Mr Ghosn earned his spurs at Nissan and currently commands a great deal of respect among his peers.

In fact, Mr Ghosn's reputation frequently outshines that of the king maker, Mr Schweitzer, who carefully groomed his heir for years before relinquishing all control to his successor to the throne.

In an industry where dignified departures are rare for chief executives, Mr Schweitzer's exit is noteworthy. Mr Ghosn has a lot to live up to.

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