Changes? at the top? @Renault.

Tomorrow, Renault will announce a “new” management structure featuring a new and improved CEO position. According to reports in the French Press, Carlos Ghosn will take more control of corporate functions including legal, HR, public affairs and real estate.  I really don’t get the real estate function oh well —  as for the others functions, he was already ostensibly in control prior to the recent spy scandal that cost the prior COO his position but the French government has insisted on something concrete to tout.  Two names have surfaced so far regarding changes within Ghosn’s inner circle, Mouna Sepehri and Farid Aractingi.

Sepehri is a newcomer to the top ranks of Ghosn advisors, having been appointed to his staff in 2007, after having served on the Renault legal team.  She has quickly gained his trust, and she appears to be his point person for legal and corporate functions.  She also takes over communications strategy, which had been a decisive downfall in the communication around the recent scandal.  The fact she comes from a legal background suggests a much more prudent and closed outlook for RNO communications in the future.  As for Renault’s financial market communications, that appears to be firmly in the domain of new COO Carlos Tavares and CFO Dominique Thormann, and if the company sticks to its current strategy, I would expect a steady flow of information, packaged around specific topics rather than the constant focus on Ghosn’s tendency to rehash the same talking points over and over.  I would look more towards the operational updates than worrying about pronouncements on global demand and political issues.

The other name floated was Farid Aractingi as head of risk management.  Aractingi, who joined the Renault Nissan Alliance in 2000 has held several positions including CIO at Nissan and most recently in internal audit at Renault.  He is one of Ghosn’s long term trusted advisors, not representing a major shift in attitude at the top.  Aractingi is a hard-nosed and analytic manager, hopefully not afraid to share bad news quickly to the top.

We’ve seen some other changes on the operational front, as expected with a new COO; a new head of Renault Samsung, which has been bleeding recently with tough domestic market, and a new head of Euromed, a region that is the engine for the Logan program.  Expect to see more changes, particularly on the commercial front to come.

Why the changes?  The company is now more accountable to the government (which holds 15%) stake and had to make some public gesture as Sarkozy heads into a tough election.  Time will only tell if the CEO gets as close to Renault operations as he was during his heyday at Nissan.

My take: More importantly, is whether the new layer of management can inculcate an attitude of trust among the director and manager class at Renault to tell it like it is, not just what the boss wants to hear.  In the meantime, Renault has the support of its partners Nissan which (despite a crushing blow from a surging yen) is on a roll. Associate income on the P&L and dividends for cash flow will bolster Renault in the near-term while we see if it can leverage those synergies we’ve talking about for the last decade.


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