Carlos Ghosn, Renault's No. 2 executive, is trying to cut costs by FF20 billion ($3.26 billion) by 2000.
The 43-year-old native of Brazil is responsible for purchasing, manufacturing and r&d. He also supervises South American operations. He joined Renault in December 1996 after six years as president of Michelin North America.
Ghosn was interviewed by Gordon Jamieson last month in Ascot, UK, at the launch of Renault's new Clio.
How will you use partnerships with suppliers to expand into new markets?
There are many kinds of partnerships. But you have to know exactly what you want. Renault does not seek global relationships, but specific cooperation on, say, transmissions. Partnership is not the aim, it is a method. We are entering them pragmatically.
What do you ask of suppliers?
We are trying to establish partnerships where we can avoid duplication. Anything they can do, we won't. This is very simple.
The supplier should not simply be told: 'Do it as fast as you can, as cheap as you can.' Instead, we should say: 'Here is the problem we want to overcome, come and help me write the cahier de charge, then go and do it the best way you can.'
Otherwise you cannot be sure if you are solving something the best way. You are not allowing the supplier to innovate, or even to propose existing solutions he has already developed for other manufacturers, which will be cost him less money.
What models will be produced in Brazil besides the Clio?
We will make the Clio, Kangoo, Megane and Scenic. The Scenic's Job One will be at the end of this year in Brazil. The total output of Clios at the Curitiba plant, now called the Ayrton Senna plant, will be about 60,000 units a year.
Will Renault build a Clio sedan?
A decision about producing a three-box, four-door version of the Clio will be made at the last moment, compatible with production considerations. We will have to see how the market develops.
Will Renault build a world car, like the Fiat Palio?
Realistically, we develop cars for Europe, but we will move step by step toward designing cars for the world market. We sell fewer than 15 percent of our cars outside Europe, but little by little, those markets will have more influence. We may do something like the Palio. But it would take - if we decided today - 36 months to make a new car.
Chairman Louis Schweitzer said Renault has cut development time to 40 months.
Our definition of the start is the pre-contract period. That does not necessarily mean there is, at that time, a precise definition of the car's design. It is not yet frozen. But you do have agreement that the car will be put on the market.
The period between the pre-contract and Job One was 40 months for the Clio. That is, until just before Christmas 1997. We can go faster if we decide to derive a car from an existing car.
What is the effect of Toyota setting up in your home market?
The fact that Toyota and other Japanese manufacturers come to Europe does not alter what we have to do. Our strategy is based on international growth. Brazil and Argentina are our priority today. Our second priority is Russia and eastern Europe. Other areas will follow.
There is a rhythm that we must follow. We move as fast as we can without jeopardizing the quality that Renault achieves in these new markets.
Does Renault's plan to cut FF20 billion from its cost structure endanger the company's competitiveness and reputation as a product innovator?
Your ability to innovate is intimately linked to your ability to grow, especially for Renault. We have been good at it in the past, and we are still good at it. Look at the Scenic and the Espace.
A second factor in competitiveness is our ability to produce reliable, good-quality cars.
Third is the ability to meet deadlines. This is related to the speed with which you can operate inside the company, and to how much you can anticipate things. You must be able to keep to the schedules.
Fourth is a competitive cost structure.
If you reduce your costs, but also reduce your ability to innovate or to enhance your quality, or to move fast, then you have reduced your competitiveness.
Our aim is to enhance our competitiveness, rather than to reduce our costs. We are very careful not to reduce levels of innovation or quality.
How much will Renault save by reducing its number of platforms from five to three?
The plan to move from five to three platforms is reflected in the FF20 billion cuts program. You need the minimum number of platforms and sites for a given output of cars.
We are intensifying our use of computer-assisted engineering. This is extremely important in terms of speed and of costs.
How do you define a platform?
It is a series of cars built with the same engineering and manufacturing processes.
The next Twingo will definitely share a platform with the replacements for the new Clio and Kangoo. The current Twingo is still based on the R5.
How do you prepare for Asia, which is probably your next step after Brazil and Russia?
Every time we have gone to a new area we have set up a local industrial operation. There is no reason it should be different for our third step.
After Russia there will be other projects. It is a product- and profit-related question. You cannot start something if you do not see how it is going to work in terms of profits.
Are you worried about the economic crisis in Brazil?
There was never a good time to go to Brazil.
All the people who went to Brazil - where there is a huge market, huge population, huge needs, huge opportunities - have made lots of money.
They had their ups and downs, but the trend was up - one of the most profitable operations, as long as you managed it decently.
You need to make decisions sometimes on very basic data and forget about prices and inflation. There is no doubt about Brazil. Growth and profits will not be linear, but you have to be there.
When will Renault return to North America?
It is not within our vision today to return to North America. We need to grow internationally. There is not enough growth in Europe.
We need to grow quickly, but without haste. We have to take time to do things well.
We cannot afford to take a blow in a new market. We have no project for North America.