Word: ghosn
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...directors table. DaimlerChrysler has said it is looking for a reduction of 14,500 jobs at Mercedes, while Volkswagen in February announced 20,000 job cuts. In such an environment, Renault appears to be defying gravity by promising ambitious results without the pain of slashing labor costs. Indeed, Ghosn is pledging to increase annual car sales by 800,000 units by 2009, double operating profit margins and improve product and brand quality. "The lesson of the Nissan revival plan was, What's vital is the result, not the precise means of attaining it," says Ghosn, 52. "We've analyzed...
Ironically, that will mean shifting away from the European market. Renault, founded in 1898 and beloved by the French for its innovative designs and reliable cars, remains profitable with a 2005 net income of $5.39 billion, making it the third largest car manufacturer in Europe. But when Ghosn was named CEO last April, he inherited slowing European car markets, dated production and management systems and some dud car models such as the Vel Satis luxury car. With Renault sales in Western Europe dropping 7.3% in the second half of 2005, group operating profit margin shrank from 5.2% to 3.2%. Ghosn...
...response, Ghosn spent nine months looking at the company's international offices, assembly lines and even dealerships to map out a new business plan for Renault. He wants to lift operating profit margin to 6%, increase annual Renault car sales from the current 2.5 million to 3.3 million, relaunch 13 existing brands and roll out 13 new models. Ghosn also plans to step up Renault's activity in luxury, SUV and crossover categories and exploit its effervescent markets outside Western Europe, where two-thirds of the extra 800,000 cars are expected to be sold...
...additional activity is scheduled to improve factory utilization rates from a current 60% of capacity to 75%, which is still nothing to write home about. Ghosn is also demanding extensive collaboration among international executives from different departments on crucial development, production and marketing decisions. "You can't have marketing managers discovering a car they are supposed to sell as it's rolling out," says Ghosn, who last year delayed the launch of a disappointingly redesigned Twingo model, at the cost of a reported $104 million. "More people and more debate must go into development. Twingo is an example...
Blunt talk like that is rare in corporate France, but Ghosn is used to breaking molds. Born in Brazil to Lebanese parents and raised in Beirut, he studied in Paris and graduated from the élite Ecole Polytechnique. In 1978 he went to work for tiremaker Michelin, eventually heading the group's South American operations, based in Brazil, before taking over the North American operations. Recruited to the money-losing Renault in 1996, Ghosn undertook a three-year cost-cutting campaign, ultimately saving the company more than $5.2 billion--and allowing it to take its controlling stake of Nissan...