Renault-Nissan CEO still bullish on Russia despite current situation

Article by Christian A., on April 8, 2014

Renault-Nissan chief executive Carlos Ghosn still sees great potential in Russia despite a current slump in auto sales in the country as well as current geopolitical matter in the region. He remarked the while geopolitical situation in Russia is "bumpy," it will not last. He said that Renault-Nissan’s strategy in Russia doesn't take into consideration short-term bumps, but only trends and long-term potential.

He remarked that Nissan’s supply chain in Russia has not been affected by Western sanctions imposed on some Russian individuals over the country’s annexation of Ukraine's Crimea region. Ghosn was in Russia for the unveiling the on-Do sedan of its revived Datsun brand. Nissan retired the Datsun brand in 1981 but said in 2013 that it would relaunch in emerging markets like Indonesia, India, Russia and South Africa.

The revival of the brand was partly aimed at tempting young first-time customers away from the used-car market. Nissan as well as other carmakers recognize Russia’s potential as brought by a growing middle class with disposable income, low car density and an aging fleet on the road. Despite these factors, car sales slumped as Russian economy has slowed.

Car sales dropped 5 percent in 2013, according to lobby group AEB. According to Ghosn, he is taking a longer-term view for the Russian market, saying that he still bullish on it despite a decline last year and a possible drop thus year.

He noted that when Nissan invest, they engage for “five, 10, 20 years down the road." Ghosn said that Datsun will benefit from the weaker ruble since the carmaker has localized its output at AvtoVAZ's Togliatti site and is using local supplies as much as possible. Renault and Nissan have inked an agreement to take control of AvtoVAZ by mid-2013.

When Renault was eventually privatized in 1996, it started to search for a new partner. It then held talks with BMW, Mitsubishi, Nissan, PSA and others. At the same time, Nissan was hit by severe financial difficulties, prompting it to look for a partner. Nissan saw its talks with Daimler stall. Renault and Nissan eventually entered into an alliance in March 1999. The alliance wasn’t unusual at that time, as the 1990s was marked by a rapid consolidation between companies. Several high-profile companies merged or were acquired, such as the one that between Daimler and Chrysler in 1998.

As part of the alliance agreement, Renault took a stake of 36.8 percent in Nissan. The Japanese carmaker vowed to acquire a stake in Renault when it becomes financially able. In 2001, Nissan acquired a 15-percent stake of Renault. The French carmaker, on the other hand, increased its stake in Nissan from 36.8 percent to 44.4 percent.

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Topics: renault, nissan, ceo, russia

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