Renault CEO Carlos Ghosn will play a more hands-on role in reviving the brand in Europe, while ceding to domestic pressure to keep car production in France, following Carlos Tavares' appointment as the French carmaker's new chief operating officer.
Ghosn has his work cut out for him considering that sales visibility for the Megane, Clio, and Twingo models this year is poor while Renault is embarking on a very risky venture to become Europe's top seller of electric cars with several billion euros at stake.
As the price of winning French government support for Tavares' appointment, Renault will invest more in its production in France, despite the country's high labor costs. The government owns a 15 percent stake in Renault and has two board members.
On Monday, Renault said that "permanent improvement in competitiveness and the development of sites in France will be a priority." The statement was a U-turn compared with Renault's recent decisions to invest in production of its best-selling Megane and Twingo models, as well as some production of its Clio, outside of France.
Ghosn seems to have survived the carmaker's espionage affair when he was forced to reinstate three top managers falsely accused of leaking secrets about the company's EV plans. But Ghosn has also emerged weaker with the appointment of Tavares, previously head of the Americas region for Nissan, as his new head lieutenant to replace Patrick Pelata who quit as COO for his handling of the spy affair.
"Between the lines it appears clear that Ghosn has had his wings clipped in the wake of the spy scandal and that state influence is on the rise at Renault," Morgan Stanley wrote in a note to investors. They added: "Tavares' appointment looks to have been rubber-stamped by the government only once Renault committed to certain production levels in France."