Renault: perpetual commotion
FCA cannot wait long for French carmaker to sort itself out
With its sprawling cast and intricate plot twists, the Renault saga is a page-turner. The arrest of charismatic boss Carlos Ghosn last November was followed by a tense stand-off with alliance partner Nissan. France’s government then thwarted a mooted €33bn merger with Italian-American rival FCA. Last week, chief executive Thierry Bolloré was “brutally” ousted. On Friday, shares fell 12 per cent after a profit warning, blamed on weakening markets and ever-increasing regulatory costs. Its shares have more than halved in the past 18 months.
The scale of the downgrade contrasted with Mr Bolloré’s defence of his record last week. But executives may well have had too many distractions. There could be more bad news to come. Clotilde Delbos, the former finance chief who is the interim chief executive, plans to revisit mid-term targets. Renault foresees a risk of negative automotive operating cash flow in the full year. It might have to sell some of its 43 per cent stake in Nissan - currently worth €10.4bn - to bolster its balance sheet.
Could that be a twist that leads towards a satisfying conclusion? Reducing the Nissan stake could help reset the troubled relationship. The lopsided capital structure - Nissan only has a 15 per cent non-voting stake in Renault - is a source of tension. Management changes should help too. The departure of Mr Bolloré draws a line under the Ghosn era, while some of the new team running Nissan are reportedly to Renault’s liking.
A healthier Franco-Japanese alliance could create the conditions for a successful tie-up with FCA. That deal is as attractive as ever, according to Ms Delbos. Industrial consolidation makes sense at a time of intense competition and soaring product development costs. But FCA itself needs to make big strategic decisions. It cannot wait long for Renault to sort itself out. A happy ending is possible. But too many plot holes need to be fixed first. Renault is not yet a best-seller.