Ghosn Remains Bullish in a Bear Market
February 14, 2008

By Nick Kurczewski

Renault CEO Carlos Ghosn says the French auto manufacturer is “ready to take the offensive” as it sticks to an ambitious turnaround plan. Speaking with journalists at Renault’s Paris headquarters Thursday, Ghosn’s continued confidence seems to run counter to a stagnant European car market, volatile exchange rates and what appears to be a looming global economic cool-down.

Ghosn mixed his optimism with several notes of caution when discussing Renault Commitment 2009, the name of the company’s bold recovery plan.

“We’ve identified the risks and know how to counter them,” said Ghosn.

By the Numbers

These risks are backed up by hard numbers.

In 2007, Renault’s European sales fell 4.1 percent. New models have had mixed success. The Twingo super-mini is selling well, but the equally brand-new Laguna family sedan has failed to set the market alight. Dealer inventories of the Laguna are high, and Ghosn said production will be scaled back.

Outside of Europe, things look much rosier for Renault’s recovery efforts. Global sales grew 16.3 percent, including an above-market-average of 32.2 percent sales growth for Renault in Central and South America.

Operating margin increased from 2.6 percent to 3.3 percent — exceeding the 3.0 percent target Renault set last year. It also compares favorably with PSA Peugeot-Citroën’s 2.9 percent operating margin for 2007, as reported earlier this week.

Ghosn confirmed Renault will target a 4.5 percent operating margin in 2008, which will then rise to 6 percent in 2009. However, overall net profit for 2007 fell 7.6 percent to the equivalent of $3.97 billion from $4.33 billion the previous year. Revenue rose 1.8 percent to the equivalent of $59.35 billion over last year. Operating profit increased to $1.81 billion in 2007 from 2006.

Global Alliance Update

Pie charts and graphs were interspersed with more colorful news that detailed Renault’s latest global alliances.

Ghosn confirmed Renault’s cooperation with Bajaj Autos, an Indian manufacturer of scooters and trikes, regarding the development of a super-cheap city-car to compete with the $2,500 Tata Nano.

Ghosn also made special mention of Renault’s plans to develop an electric car for worldwide sales by 2012; the continued success of the low-cost no-frills Logan sedan; and a new alliance with Russian manufacturer AutoVAZ.

“I think that whatever happens in Europe, we will increase our volumes by 10 percent," said Ghosn regarding sales forecasts for 2008.

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