Renault CEO sets priority to make development of upscale cars for French factories

Article by Christian A., on June 1, 2011

Chief Executive Officer Carlos Ghosn of Renault SA has is prioritizing the development of upscale vehicles for French factories as the government intensifies its influence after a failed industrial espionage probe.

Last Monday, the company named Carlos Tavares to be the deputy of Ghosn, replacing Patrick Pelata, who resigned over his involvement in the dismissal of three executives who were wrongfully accused of espionage activities in a mishandled internal investigation.

The French government, which is Renault’s biggest stakeholder with a 15 percent share, made support for the appointment conditional on strategy changes such as taking a stronger lead in its alliance with Nissan Motor Co., individuals who are familiar with the matter disclosed.

Analyst Erich Hauser at London-based Credit Suisse shared that if it is hard “just to get your man in place,” we will be seeing more of government influence. He added that France is a "relatively small shareholder with a disproportionate say over strategy,” which should concern the other investors.

In order to obtain state support for the new appointment, Ghosn, who also oversees Nissan, has agreed to devote more time to Renault, according to sources. Moreover, Ghosn will also see to it that Renault will boost French production.

In an interview with the French daily Le Parisien, Ghosn stated he plans to be "more present in France from now on." He will also oversee development of models that are more upscale than its standard compacts. Furthermore, Renault intends to invest in Chinese factories and merge OAO AvtoVAZ as a "Renault subsidiary," Ghosn stated.

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