Automotive News Europe - September 2011 - 66

AUTOMOTIVE NEWS EUROPE

OEM

As Ghosn’s No. 2 at Renault, Tavares must reshape the company and rebuild consumer confidence

THE ‘OTHER’ CARLOS
BERTRAND GAY
autonewseurope@crain.com

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“We work on too many subjects at a time, we have to focus.”
CARLOS TAVARES
Renault chief operating officer

t’s one thing to take the place of a man who was an institution inside the executive hallways at Renault. It’s another to take that position after an alarming industrial espionage scandal, heavy government pressure and plenty of public scrutiny. But that’s where Carlos Tavares finds himself as Renault’s relatively new No. 2. Few doubt there’s an executive better positioned for the challenge. “I’ve dealt with many OEMs but I’ve never dealt with anyone with such a broad view as Carlos Tavares,” said Joao Dias, national coordinator of the mobi-e electric vehicle charging network in Portugal, where Nissan has a groundbreaking EV partnership with the government. “I think his human characteristics, his personality, are very important in him being able to make all these connections with many governments and important cities.” An engineer by training, Tavares’ great talent lies in zooming out to see the big picture. It’s why in late May, Renault turned to Tavares, formerly Nissan’s top executive for the Americas regions, as second in command to CEO Carlos Ghosn. Tavares replaced Renault Chief Operating Officer Patrick Pelata, who stepped down in April following a botched industrial espionage investigation. Tavares, who is Portuguese, spent 23 years at Renault in engineering and program management roles before moving to Nissan in 2004. Like Ghosn, a French citizen who was born in Brazil to a Lebanese father and French mother, Tavares has an international outlook. Known as a hard worker with an informal and approachable style, Tavares is comfortable changing between Portuguese to flawless French and English. Potential Ghosn successor “Tavares has a good knowledge of both Renault and Nissan and should help Renault capitalize on the alliance,” said David Arnold, a London-based Credit Suisse analyst, who believes Tavares could “one day be seen as a potential Ghosn successor.” But being Pelata’s successor will not be easy for Tavares. He faces a number of challenges to implement the carmaker’s midterm strategy. The plan, which is called Renault 2016 – Drive the Change, aims to boost growth in international markets and become a leader in electric vehicles. “We need to be sure that all our model lines are profitable and more global. We have

accused of stealing electric car secrets. In France, the episode had a negative impact on Ghosn’s reputation and on the trustworthiness of Renault. Sales dropped in France. A shortage of Renault’s mainstream 1.5liter diesel engine also hurt sales. Tavares said Renault “will invest 150 million euros to remove those bottlenecks in our engine production so that we’ll be able to answer to a higher demand.” Product problems Renault’s domestic market share declined by 3.3 percentage points to 25.2 percent through the first half. Renault has suffered in terms of product cadence and a lack of investment. A product freeze in 2008 and 2009 led to the cancellation of projects such as a high-end SUV previewed by the Egeus concept at the 2005 Frankfurt auto show. Renault won’t have significant new product until mid-2012 when the new Clio subcompact is due. Higher-than-normal incentives, including a 40 percent rebate on a 1.2-liter Clio gasoline vehicle, will help stem the tide. But Tavares said Renault has good products coming in the compact and mid-sized segments. “I have found robust future product ideas” in the development stage, he said. Tavares knows about manufacturing. In his most recent role he reduced Nissan’s global manufacturing costs by expanding production in Mexico. But in cutting Renault’s production costs at home and expanding production outside France, Tavares will have to tread carefully to avoid conflict with the French government, which has a 15 percent stake in the automaker. Early next year, Renault will open a plant in Morocco, and capacity is being increased at Renault’s plants in Turkey and Romania. This will add 1 million units of capacity that will primarily be used for entry-level vehicles, including a low-cost minivan for the Dacia brand. These moves have been closely scrutinized by the French industry ministry which is trying to promote the idea of French-made products. To reduce the pressure, Ghosn promised to spend more time in France managing Renault than he used to. Tavares will be the link between Ghosn’s world ambitions and the local issues at Renault. Added together, it’s a tall task. If anyone can do it, outsiders say Tavares can. Said his fellow countryman Dias: “His eyes are lively and shining: he’s very enthusiastic, he transmits a lot of energy to you and he’s a visionary.” ■

TAVARES’ TOP TASKS
1. 2. 3. 4. Rebuild customer confidence Fix production bottlenecks Maintain sales during product lull Avoid conflict with French government

to raise the business fundamentals of Renault and we have to create conditions where our employees are clearly focused on creating value for the company,” Tavares told Automotive News Europe. “We work on too many subjects at a time, we have to focus.” As he settles into his second full quarter as COO, Tavares has a list of other tall tasks. Among them is regaining consumer confidence and winning in Renault’s home market of France and the rest of Europe. While Renault reported a first-half profit that beat analyst expectations, it was mostly because of sales growth outside Europe. Growth in Russia, Latin America and Turkey led to a 1.9 percent increase in global firsthalf deliveries. Renault’s share of European registrations narrowed to 9.5 percent in the first half from 10.5 percent a year earlier, according to data from industry group ACEA. “Growth outside Europe will continue to support our sales performance,” Tavares said at an analyst conference at the carmaker’s French headquarters. In its home market Renault has plenty of challenges. Renault’s image was hit hard by the espionage case in which the company fired three top executives who were falsely

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SEPTEMBER 2011

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