Patrick Pelata’s resignation threatens Renault’s recovery plan

Article by Christian Andrei, on April 25, 2011

With COO Patrick Pelata leaving Renault SA over a bungled espionage probe, analysts stated that the company’s goals to reverse its downward trend in European sales and to expand in emerging markets are at risk.

His resignation leaves the company without a permanent replacement for his position and the company may find it hard to restore its core vehicle manufacturing operations to consistently post a profit and pursue previously announced profit and sales targets.

According to analyst Philippe Houchois at UBS AG in London, the biggest challenge for the automaker is to determine its core brand and to prevent losing its European market share.

He also said that whoever is assigned to Pelata’s position, there won’t be a smooth transition as there appears to be no succession plan available.

Although the company’s Dacia unit has a positive sales record, the brand’s share of west-European sales has averaged below 8 percent during the past three years compared to almost 11 percent in 2002, according to the data from Association of European Carmakers.

Renault is relying on the refurbishments planned by Laurens van den Acker, the company’s head of designs, and a push in emerging markets in order for it to obtain a 5 percent operating-profit margin with 3 million sales by 2013.

Moreover, analyst Albrecht Denninghoff at Frankfurt-based Silvia Quandt Bank stated that Renault has set goals that are hard to achieve even when it has a stable team of management.

Denninghoff added that Pelata’s exit is "is bound to delay some important decisions." Moreover, Renault may be less likely meet its targets with the disrupted operations at its affiliate Nissan Motor Co. due to the March 11 earthquake and tsunami in Japan.

Topics: renault, france

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