Chairman Louis Schweitzer says he expects Renault to retain the lead in its alliance with Nissan, even though its Japanese partner is recovering fast.
Renault acquired a 37 percent stake in near-bankrupt Nissan in March 1999. It put Carlos Ghosn, one of its star executives, in charge of turning round the ailing company. Two years later, analysts expect Nissan to post a profit of some E2.3 billion for the fiscal year ending March 31, 2000. Moreover, its stock market value is worth twice that of Renault - about E27.3 billion compared with E14.4 billion for Renault. This has led some analysts to wonder how long Renault will be the dominant partner within the alliance.
The 1999 accord allows Nissan to take a stake in Renault. But Schweitzer said that won't be considered as long as Nissan's debt remains high. Nissan's automotive debt last September stood at roughly E11.5 billion. Nissan aims to cut its debt in the fiscal year ending March 31, 2003.
'To consider a cross-shareholding, you need a sound balance sheet,' Schweitzer said. 'As long as Nissan's debt remains at those levels, a cross-shareholding is not on the agenda.'
Even when Nissan's debt problem has been solved, Schweitzer said he 'does not envisage' Nissan ever raising its holding in Renault to the level of Renault's stake in Nissan. Schweitzer added he does not see Renault reducing its own stake in Nissan.
Under the accord, Renault cannot raise its stake in Nissan to more than 39.9 percent until 2003, when it can boost it to 44.4 percent. It can exercise this option at a set price of 400 yen (E3.6). Nissan shares are currently trading at about 750 yen.
At the Geneva auto show, Ghosn agreed Nissan was not out of trouble yet. 'We're still in a delicate situation,' he said. But Nissan's European operations, which currently post a substantial loss, should be back to profitability in fiscal year 2001, he said.
Asked how he saw Nissan's alliance with Renault evolving, he said that 'a group is a successful alliance.'
As for Renault's own E4.8-billion debt, Schweitzer said it was not preventing the company from making the strategic investments it needs. Still, the company has said it will focus this year on organic growth, suggesting it will avoid large acquisitions for now.
Regarding the health of the European car market, Schweitzer said he expects it will be a little better than in 2000 and a little weaker than in 1999, a record year. Renault sales, he said, will take off in the second quarter. Renault's objective, he said, is to raise its market share in western Europe above the 11 percent reached in 2000.
Schweitzer said initial public reaction to the Laguna II has been excellent. The new upper-medium model went on sale in late January.