‘Nissan alliance a priority’ says Renault chairman as profit warning issued

22 October 2019

Renault is aiming to get its alliance with Nissan back on track in 2020 and sees a potential revival of merger talks with Fiat Chrysler Automobiles (FCA) as less of a priority.

Following the arrest of former CEO Carlos Ghosn last year, the two carmakers have maintained a strained relationship, one which also played a part in the collapse of talks between the French carmaker and the Italian motoring group.

′My obsession is for the alliance to take off in 2020,’ chairman Jean-Dominique Senard told France Inter radio.

′If, by 2020, we don’t manage to start extracting … all the potential of this alliance, I’ll consider it to be a failure, on a personal level and by our teams.’

Changing guard

The statement comes on the back of a management shake-up at Renault, which has seen CEO Thierry Bolloré ousted in a bid to move away from the reign of Ghosn, while Senard has also taken the role of president for the time being. Nissan too, has undergone its own managerial changes in a bid to move on from the scandal.

Discussing the failed merger, Senard said:  ′Today, it’s not on the table,’ later adding that ′one must never say never.’

Senard added that reducing Renault’s 43.3% stake in Nissan, which could help improve relations and the possibility of a deal with FCA, was also not top of his list.

′Nothing can ever be excluded, [but] this is not what we’re focused on,’ he said in the interview.

Profit warnings

Senard’s remarks come after the French manufacturer cut its sales and profit guidance for the year following the management shakeup.

The move is one of the first acts by its interim chief executive Clotilde Delbos to restore order to the French carmaker. The company blamed tough market conditions, delays to key vehicle launches and its own inability to cut research costs for the downgrade.

Renault said sales would fall 3-4% this year because of ′an economic environment less favourable than expected and in a regulatory context requiring ever-increasing costs.’

Target driven

Delbos said the carmaker would reassess its midterm strategic plan, which had been drawn up by Ghosn, in another example of the French firm’s attempt to move away from his influence.

Renault is just one carmaker suffering in the automotive market at present, with diesel sales falling dramatically and investment needed in zero-emission vehicles to allow for strict EU CO2 targets to be met.

′Regulation forces us to improve our cars in order to meet new emission rules,’ said Delbos, adding that the business had been ′late delivering some models in some countries’.

Sales had been expected to stay roughly flat with guidance having already been cut in July when Renault blamed falling sales and the decline of diesel sales and poor performance from Nissan, which buys some engines from Renault as part of their alliance agreement, for the results.

Operating margin should now be about 5%, compared with 6% previously, added the carmaker. Operating free cash flow should be positive in the second half, said Renault, while not guaranteed for the full year.