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Last Updated: Thursday, 9 February 2006, 10:37 GMT
Renault boss unveils revival plan
Carlos Ghosn
Mr Ghosn wants to focus on new Renault models
Renault chief executive Carlos Ghosn has revealed details of a three-year strategic plan that will change the way the French carmaker operates.

He said group would introduce 26 new models before 2009 in a drive to become most profitable car maker in Europe.

The Brazilian said there were no plans to reduce staff levels just now, but that purchasing costs would be cut by 14% and manufacturing costs by 12%.

"Renault is not in crisis but remains fragile," he said.

The 51-year old Mr Ghosn has been at the helm of Renault since May 2005, while still holding on to his post as chief executive of Nissan, in which Renault has a 44% holding.

Investors will have to wait until 2008 and 2009 before the model offensive brings results
Albrecht Denninghoff, HVB Group

The two firms came together at the start of the decade, when Renault bought a controlling stake in Japan's Nissan, which at the time was in financial difficulty.

Nissan was then successfully revived by Mr Ghosn, something he hopes to repeat at parent firm Renault.

Renault hopes to boost sales by 800,000 cars by 2009, and is aiming to launch roughly eight new cars a year between 2007 and 2009.

The group also intends to enter new sectors, including sports utility vehicles (SUV) and four-wheel-drives.

'Grow to profit'

Mr Ghosn said he aimed to make Renault "the most profitable generalist car maker in Europe".

However, the markets were not immediately convinced by his plan and Renault shares fell by more than 2% in early Paris trade.

Ghosn's giant
Carlos Ghosn
Nissan is the world's ninth largest car maker, Renault the tenth, in terms of unit sales
Carlos Ghosn is chief executive of both
The alliance commands a 9.8% global market share, with 5.74% for Nissan and 4.04% for Renault
The alliance ranks fourth in the world, after General Motors, Toyota and Ford, ahead of Volkswagen and DaimlerChrysler
Renault holds a 44.4% stake in Nissan
Nissan holds a 15% stake in Renault

Many analysts were wary about Mr Ghosn's plan.

"The strategy was different from what we had originally assumed," said Albrecht Denninghoff, European auto analyst at HVB Group.

"It's not a 'shrink to fit' but more of a 'grow to profit' plan. Secondly, it will take longer than anticipated.

"Investors will have to wait until 2008 and 2009 before the model offensive brings results."

He said it appeared the revamp would be harder to achieve than the one Mr Ghosn carried out at Nissan.

Renault is seen as being highly dependent on its sales of Megane family of cars in western Europe.

Referring to Renault's operating margin for 2005, Mr Ghosn said: "We cannot be satisfied with an operating margin of 3.2%" which was "inferior to the average margin of other world car makers which is 3.6%".

He added he would aim for an operating margin of 6.0% by 2009.

'Good image'

Renault's 130,000-strong workforce had feared job cuts, and, while none were announced, Mr Ghosn warned that his plan was "essential to avoid a restructuring".

Formula One will continue to have a good return on our investment, and Renault will still be there
Carlos Ghosn

"What Renault needs is growth, new products and a good brand image," he added.

At the same time as he unveiled the company revamp Mr Ghosn said net profit rose 19% in 2005.

Net profit was 3.37bn euros ($4.03bn; 2.32bn) last year, up from 2.84bn the year before. However, operating profit fell 38% to 1.32bn euros from 2.12bn.

Renault said it had suffered from rising raw material costs and a highly competitive European market.


SEE ALSO:
Nissan warns of tough times ahead
28 Oct 05 |  Business
Renault to build Megane in Iran
24 May 05 |  Middle East
Renault boss hails 'great year'
08 Feb 05 |  Business


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