Ghosn to Broaden Renault Operations Role After COO Leaves

Renault SA Chief Executive Officer Carlos Ghosn will take more direct control of day-to-day operations at France’s second-largest automaker following the departure of Chief Operating Officer Carlos Tavares last week.

Two new managing boards will be set up and report to Ghosn, the manufacturer, based in the Paris suburb of Boulogne-Billancourt, said today in a statement. One set of executives will focus on developing and building vehicles, while the other will be responsible for marketing and sales. The arrangement eliminates the COO position and is permanent, Raluca Barb, a spokeswoman, said by phone.

Tavares, 55, was the second executive in five years to hold the chief operating officer position. The management reorganization concentrates operational responsibility at Renault in the hands of Ghosn, 59, who also runs Japanese carmaker Nissan Motor Co. and the two manufacturers’ 14-year-old production and sales alliance.

The model-producing managers, dubbed the competitiveness group, will “reinforce the development of an attractive product range” while ensuring vehicle quality and holding back costs, Renault said. The sales executives in the so-called performance group will focus on “growth, market share and profitability of sales.” The company didn’t specify who will lead either board.

Potential Successors

“This strengthens Ghosn’s position and makes Renault’s management organization closer to that of a German company” or to Paris-based competitor PSA Peugeot Citroen, said Philippe Houchois, a London-based analyst with UBS Ltd, by phone. “This will also enlarge the circle of executive board members that could aspire to lead the company in about five years.”

Renault fell as much as 2.3 percent to 52.87 euros, the lowest intraday price since July 3, and was trading down 0.1 percent at 1:03 p.m. in Paris. That pared the stock’s gain this year to 33 percent, valuing the manufacturer at 16 billion euros ($21 billion).

Tavares, who joined Renault more than 30 years ago as a test-driving engineer, stepped down two weeks after publicly saying that he’d like to run General Motors Co. and Ford Motor Co. He said in a Bloomberg interview published Aug. 14 that Ghosn planned to stay at Renault for the foreseeable future and therefore he was interested in running a U.S. car company instead.

Labor Accord

Under Tavares, Renault reported unexpected growth in first-half profit as labor-cost reductions and higher vehicle prices more than offset an industrywide slump in European deliveries. He was also instrumental in pushing through a deal with unions in March to cut Renault’s French workforce 17 percent and freeze wages in exchange for not closing domestic plants for three years.

The company is targeting more sales outside Europe to reduce reliance on its home region. Renault, which also owns no-frills carmaker Dacia, is reviving the Alpine sports-car marque and expanding the Initiale Paris insignia into a luxury brand under a strategy that Tavares outlined last year to add premium models to increase earnings.

“Tavares left because of a lack of professional perspective for him,” Houchois said. “He’s a relentless executive with strong principles who isn’t afraid to make enemies.”

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