Peugeot’s boss, Carlos Tavares, plans a merger with Fiat Chrysler

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Talks of a merger between Fiat Chrysler and PSA group have put the spotlight on “the other Carlos”

IN 2013 TWO Carloses sat atop the Renault-Nissan alliance. One was Carlos Ghosn, the Brazilian-born architect of the Franco-Japanese carmaking colossus. His protégé was Carlos Tavares, the Portuguese chief operating officer of Renault, who made sure that good cars rolled off the production line. But Mr Tavares, an engineer and racing driver, was not content trailing the fast-living Mr Ghosn.

A corollary to the Great Man Theory is what could be called the “Big Firm Hypothesis”. Typically attributed to Marchionne, it posits that huge challenges facing the industry, such as electric vehicles and self-driving cars, necessitate global consolidation. To an extent Mr Tavares embodies both doctrines, having swiftly turned around first Peugeot, after it was battered by the financial crisis of 2008-09, then Opel and Vauxhall, which he bought from GM in 2017.

The fraught Renault-Nissan tie-up is a case in point. In the wake of Mr Ghosn’s fall from grace last November it has been an example of how not to run a car empire. Well before his arrest, the arrangement had serious flaws. Rather than being a global network built around strong brands and factory-wide economies of scale, it was more of a global car park. It filled different parts of the world with as many of each firm’s cars as possible , whatever their price and quality.

Since Mr Ghosn’s arrest things have gone from bad to worse. Renault’s abortive merger with FCA showed what an irksome meddler the French state has become. It has obstinately refused to make any concessions to the wary Japanese, for instance by selling down Renault’s stake in Nissan to rebalance the shareholding or by reducing its own stake in Renault. In the meantime the feud has distracted all three alliance members from the business of selling cars. Nissan’s sales have shrunk.

In the eyes of the French government, the best answer is to double down on the alliance. Renault’s chairman, Jean-Dominique Senard, has vowed to do just that, hoping that a recent change of leadership at the top of both Renault and Nissan will help. Investors would prefer a clearer break with the past. Some want Renault to sell some of its Nissan shares and use the money to strengthen its balance-sheet, as a prelude to a more equitable alliance. Others want a full merger of the two.

 

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