Despite spy-claim fiasco, Ghosn maintains his hero poise
Link to the article in Automotive News Europe: http://www.autonews.com/article/20110504/BLOG15/304309979/1503
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.
Renault's big bet on the Zoe, the small hatchback that will be the volume seller among the company's four-model electric car lineup, could pay off. But in order for it to do so, Renault must prove that it can deliver on its promise that it can offer an affordable and reliable electric car that will save drivers money.
Renault believes it should not be difficult to convince a large segment of European consumers that EVs can make much more sense price-wise and environmentally compared with combustion-engine cars.
The French automaker will market the Zoe as an alternative to the upcoming Clio, which Renault will launch at about the same time as the Zoe in 2012.
The Zoe will retail in France for about 15,000 euros after French government rebates, which will be the same price as the diesel version of the Clio. Comparatively, the Nissan Leaf retails for about 31,000 euros in France after the rebate.
Renault is targeting mainstream buyers, which is reflected in the Zoe's conservative rather than futuristic design. Renault hopes that fuel-cost savings will represent Zoe's main selling point for drivers who desire the same drivability and size that the Clio offers but want to save a lot of money. The Zoe has a range of about 160km on a full charge that costs about 2 euros. It can easily cost five times more in diesel fuel to drive the equivalent distance in a Clio.
When I drove a concept version of the Zoe, the steering wheel felt very stiff and the seats were hard. It felt more like driving a riding lawnmower than a street car. However, Renault says the production version of the concept I drove will drive as smoothly as any production-model Clio when it launches.
Renault plans annual sales of 150,000 units for the Zoe, a volume Chief Operating Officer Patrick Pelata says could be doubled quickly if needed.
A negative is that you can't take the car on vacation. Renault says it will make cars available for weekend or vacation trips, but I wonder how that will go given the not-so-great aftersale services among carmakers in France.
Customers will also be wary of Renault's less-than-stellar reputation for reliability. EVs in general should require less maintenance, but that can't compensate for faulty builds and defective components. Many previous Renault owners have been burned badly and will hesitate to take a risk on something so new that Renault is offering.
According to Warranty Direct, a UK-based consumer warranty company, the Renault Espace ranks third from last in the reliability rankings of all cars in Europe and is the only mainstream model to be in the bottom five. There is a saying in France that goes, "If you drive with a Renault, then you come back on a bike."
