Wednesday, May 4, 2011

Despite spy-claim fiasco, Ghosn maintains his hero poise

Despite spy-claim fiasco, Ghosn maintains his hero poise

Link to the article in Automotive News Europe:

Renault CEO Carlos Ghosn emerged largely unscathed from the company's annual shareholders meeting after portraying himself as the victim of the the spy-claim fiasco that has rocked the French carmaker.

Shareholders expressed much less anger than expected at the meeting and Ghosn made a strong case that the company has done everything needed to put the affair behind it.

A poised Ghosn conveyed that he is not only still fully in control, but he has also saved Renault from a major crisis. He told shareholders at the meeting on Friday that he and Renault had responded "courageously and responsibly" by accepting the consequences of the affair, including compensating wrongfully dismissed executives and accepting the recommendations of an audit committee that proposed sweeping changes in Renault's checks-and-balances structure.

Shareholders applauded when one of their number asked why Ghosn did not quit because of the affair, like his No. 2 Patrick Pelata, who resigned as chief operating officer and will move to a lesser role within the Renault-Nissan alliance.

Ghosn deftly referred the query to Marc Ladreit de Lacharrière, chairman of the carmaker's appointments and governance committee, who said that the committee unanimously agreed that it would not be in the company's interest to ask for Ghosn's resignation.

The consensus among several shareholders with whom I spoke at the meeting was that executives who ranked below Ghosn were responsible for the spy debacle and that Ghosn was too far removed to share blame.

Stephen Norman, Renault's head of marketing , told the meeting that surveys carried out since the spy scandal broke in mid January showed that the affair has not affected Renault's image as a carmaker in France or abroad. However, Norman said those surveyed were split 50-50 on whether it had had a negative effect on Renault's corporate image. Still, the results suggest that Renault's brand image new car sales will not be hit by the scandal.

But Ghosn has more than just his image as a competent CEO to worry about — his legacy-status as an industry hero is also at stake. Ghosn is seen as having orchestrated the rescue of Japan's Nissan from bankruptcy in the late 1990s.

Ghosn has other challenges to worry about now. He must contend with the public outcry in France that Renault continues to boost its investments in production and new jobs outside of France at the expense of French jobs. The company also is faced with the monumental task of establishing the presence of Renault-brand cars in China and whether its huge bet on becoming a leader in electric cars will pay off.

Renault has an image problem, especially outside of France and particularly with reliability issues. It is also often seen as the French-equivalent of a large welfare project that could not run on its own without government aid (the French government has a 15 percent stake in Renault).

If Ghosn could somehow engineer a way for Renault to overcome the obstacles it faces, he would be a hero indeed.

Contact Automotive News

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