PARIS – Renault, Nissan Motor and Mitsubishi Motors will reconsider their sales target of 14 million cars worldwide by 2022, Renault chairman Jean-Dominikue Senard said, citing the withdrawal from the tough pursuit of former head Carlos Ghosn Scala.
"In the coming months, we will redefine the target, depending on the confirmed elements," Senard said in a joint conversation with Nikkei and the French newspaper Le Figaro.
The changes came at a time when Nissan's workers' home faces a slowdown in sales in China and the US, two of the world's biggest car markets.
Since assuming office on January 24th, former Michelin tire director general was ready to close a gap between French and Japanese car makers after Ghos was arrested in June last year in Japan on charges of misconduct. Senardi also became the head of the new decision-making committee to launch the alliance in late March.
The alliance Renault-Nissan was formed in 1999 as a rescue line for the Japanese manufacturer. With the completion of Nissan's reorganization, Ghosn became the leader of both Renault and Nissan in 2005. In that role, he insisted on maximizing the economies of scale by dividing production centers and standardizing parts around the car. The Alliance's sales exceeded $ 10 million after Nissan invested Mitsubishi in the 2016 investment.
Nissan has been restored under the high targets foreseen by Ghosn. The mid-term plan for three car manufacturers aims to increase combined annual sales by 40% from 2016 to over 14 million vehicles in 2022, bringing annual synergies to 10 billion euros ($ 11.3 billion). However, these aggressive goals began to take tribute to the alliance.
The focus of the alliance on global sales led Nissan to neglect investment in Japanese factories and staff, resulting in a scandal over improper vehicle inspections. In the meantime, Nissan's profits have suffered from a decline in profitability in North America, as it is a priority in expanding its market share. The alliance is likely to reduce its target of sales compared to Nissan's struggles in the US and China.
Senard acknowledged that the French government, the highest shareholder of Renault, invited him to make his alliance with Nissan irreversible – although not necessarily in those words.
"I have no worries [government] A mix of freedom I need to do what I have to do, "he said, adding that it was his priority to improve the efficiency of the alliance and indicated that Paris would understand his position not to rush to possible merger.
"If we reduce the alliance to the sum of synergies, that's fine, but it will not do much to engage our teams," Senard said. "We need to redefine the purpose of the alliance."
Without direct criticism of Gosn, Senard urged the return to the philosophy of the establishment of the alliance, "which means taking into account the respect of cultures and companies and working together to increase efficiency."
Nissan and Renault have expanded the number of areas in which they work together on the principle that both sides benefit, such as the collective purchase of parts to reduce costs.
However, in recent years, under the leadership of Ghosn, "cooperation in order to meet the Alliance's numerical goals has increased excessively," said the executive director of Nissan.
Let's take, for example, the decision to transfer Nissan's compact Micra cars from India to the Renault factory in France. "The impact on Nissan has not been considered sufficiently," added the executive director.
Concerning the proposal for the merger of the French government, Senard said: "Today I do not care about it. If I were to talk about merging, it would be a matter of intelligent merging of our cultures so that the alliance would become very efficient. Other ids would not be relevant."
The French government owns 15% Renault and appoints directors to its board. She intervened in the appointment of Renault's management and could require faster merging.
"All shareholders have the freedom to speak, but when there is a person with a mandate, you have to let the person finish the mandate," Senard said. "I had no difficulty understanding that point."
Senard is expected to become Nissan's director at an extraordinary meeting of car shareholders on April 8 and vice president of a regular shareholder assembly in June.
"I will not just sit and listen to what others tell me" in Nissan, he said, adding that the economic future of the alliance is on the line.
It is expected that Nissan's net profit will fall by 45% to 410 billion yen ($ 3.68 billion) for the fiscal year to March. Renault makes about half of its net profit from Nissan.