Bloomberg News

Renault’s Tavares Said to Have Asked Ghosn for Wider Role

August 30, 2013

Carlos Tavares

Carlos Tavares, chief operating officer of Renault SA. Photographer: Balint Porneczi/Bloomberg

Renault SA (RNO) Chief Operating Officer Carlos Tavares proposed taking on a wider role at the French carmaker in meetings this week with Chief Executive Officer Carlos Ghosn, two people familiar with the matter said.

Ghosn, who is also the CEO of alliance partner Nissan Motor Co. (7201), turned him down and offered to let him stay as COO, said the people, who asked not to be identified because the talks were private. Tavares, who would have still reported to Ghosn under his proposal for a broader role, decided instead to seek a top post elsewhere, they said.

Tavares wanted to expand his responsibilities beyond purely operational decision-making to include oversight of areas such as human resources and legal matters, one of the people said. Phone calls and e-mails to Tavares yesterday were not returned.

France’s second-largest automaker is now considering whether to drop the position of COO completely, another person familiar said. Renault plans to decide soon on changes to the management organization, the Boulogne-Billancourt, France-based company said in a statement yesterday announcing that the 55-year-old executive was leaving and would be temporarily replaced by the 59-year-old Ghosn.

“For the moment, there’s no plan to replace Mr. Tavares,” Laurent Smolnik, the FO union leader at Renault, said in a phone interview.

Bigger Ambitions

Tavares was appointed to the job two years ago after former COO Patrick Pelata had to resign over a botched spy investigation in which three senior managers were wrongfully dismissed. Pelata was the first person to hold the position, which was created in 2008.

Tavares said in a Bloomberg interview published Aug. 14 that Ghosn planned to stay for the foreseeable future and he therefore was interested in running General Motors Co. (GM:US) or Ford Motor Co. (F:US) instead.

The statement appeared to be a “somewhat bizarre way to put pressure on Renault to take a decision on Ghosn’s succession,” said Philippe Houchois, a London-based analyst with UBS. “The question now is: what are the expectations on the evolution of the Renault-Nissan alliance? The likely extension of Ghosn’s mandate reflects the fact that they’re not ready to make the alliance evolve yet.”

Other managers and union leaders had expressed their concern to Ghosn over keeping a top executive who was publicly offering himself for a post with a competitor, a person said.

Credibility Questioned

“What credibility can Mr. Tavares hope to have, when the same top management keeps on saying that the future and the success of the company essentially relies on the unyielding commitment of all?,” the FO union said in a statement on its website. “Given this obvious lack of interest in the company, it is clear that there’s no room for Mr. Tavares.”

Tavares joined Renault more than 30 years ago as a test-driving engineer and moved up through the ranks to eventually run Nissan’s North American operations.

Under Tavares, Renault reported unexpected growth in first-half profit as labor-cost reductions and higher vehicle prices more than offset an industrywide slump in European deliveries.

Tavares said in an interview last year that he wanted to expand the Renault group’s offerings by adding two upscale brands to the automaker. Renault has since announced plans to revive the Alpine sports-car marque and expand the Initiale Paris insignia into a luxury brand. Along with the namesake marque, the carmaker also owns the Dacia no-frills badge.

Well Respected

The COO was also instrumental in pushing through a deal with unions in March to cut its French workforce 17 percent and freeze wages in exchange for not closing domestic plants for three years. Renault is pushing for more sales outside Europe to reduce reliance on its home region.

“He was a very well regarded, very respected manager, with a clear focus on costs and profitability,” said Jens Schattner, an analyst at Macquarie Europe Ltd. “He has a good track record.”

When Tavares oversaw North America for Nissan, 43 percent owned by Renault, he helped the company earn 209 billion yen ($2.2 billion) in the region in the year ended March 2010, versus a 46.7 billion yen loss in 2009. During the downturn, he retained experienced factory hands by persuading them to work four days a week instead of five, with a 20 percent pay cut.

“We have a big leader and he is here to stay,” Tavares said of Ghosn in the Bloomberg interview. “Anyone who is passionate about the auto industry comes to a conclusion that there is a point where you have the energy and appetite for a No. 1 position.”

Tavares, who in the interview said that he hadn’t talked to Ford or GM about future CEO openings, said his best chance to run an automaker was in the U.S.

“He’s not coming here,” Greg Martin, a GM spokesman, said yesterday in a telephone interview. Ford for competitive reasons does not discuss its succession plans externally, Jay Cooney, a spokesman for the automaker, said in a statement.

To contact the reporters on this story: Mathieu Rosemain in Paris at mrosemain@bloomberg.net; David Welch in New York at dwelch12@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net; Jeffrey McCracken at jmccracken3@bloomberg.net


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