Summit Notebook

Exclusive outtakes from industry leaders

Renault is too complex, COO says

November 2, 2009

One of the big challenges for French carmaker Renault, which ranks third in the world with Japanese partner Nissan and Russian ally AvtoVAZ, is that it is too complex, chief operating officer Patrick Pelata told the Reuters Automotive Summit.

“Renault is a complicated company,” he said and explained how many carmakers had embraced a matrix organisation to deal with their international expansion. “We’re definitely more complicated than Nissan,” he said.

He should know, he worked several years with Carlos Ghosn at Nissan and found met his wife in Tokyo.

Pelata, who was born at the feet of the Pyrenees mountains in Les Pujols in 1955 before studying at the prestigeous Polytechnique and Ponts et Chaussees schools in Paris, is in charge of diminishing this complexity and eking out costs. 

But while fixed costs were reduced by 17-18 percent in the past few years, the car markets collapsed at the same rate and the company needs to find more cost reductions.

Not just in France, where the firm is making some adjustments to its plants around Paris, but also in Latin America and South Korea where benchmark studies — against Volkswagen for instance — showed that improvements can be made.

The alliance with Nissan — set to become the second-biggest car group in the world after Toyota if GM decides to sell Opel/Vauxhall later this week — is also a lever for further cost cuts and Renault and Nissan have changed the command structure in the alliance so that it becomes more difficult for managers in the two companies to stop or delay alliance efficiency measures.

“In the allliance there were a lot of brilliant ideas, but the implementation was sometimes problematic,” Pelata said.

Pelata interview with Reuters Financial TV

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