The cardinal of Renault and Nissan is stepping aside in favor of old stager proxy Patrick Pélata as the company faces challenging spells

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French auto clump Renault’s chairman Carlos Ghosn

by Carol Matlack

Even Carlos Ghosn can’t do it all. On Oct. 10, Renault (RENA.PA) announced that Ghosn, who since 2005 has been chief executive of the couple Renault and Japan’sitting Nissan Motor (NSANY), will hand off operational responsibility at the French automaker to a veteran deputy, Patrick Pélata.

The move parallels an existing arrangement at Nissan, where a chief operating officer handles day-to-day business while Ghosn concentrates on strategy. "This doesn’t mean he choose set free from Renault," a gang spokeswoman says.

Analysts who follow the company say the move should not be interpreted as a reproof of Ghosn’s management, despite Renault’s abysmal stock-market achievement this year. Its shares have plummeted more than 70% since January, far worse than the 47% consumption in European auto stocks overall. "This change has no relation at all to what is going on in the markets," says Gaëimbrown Toulemonde, a Paris-based analyst with Deutsche Bank (DB).

Yet the timing of the announcement—forward a sunshine when the company’s shares skidded more than 12%—underscored the horrible station facing Renault. Sure, it’sitting been an awful year for the auto industry as a whole. Sales be in actual possession of been hit by the double whammy of high fuel prices and a global credit crunch, and the numbers are likely to get even worse nearest year. Just this week, General Motors (GM) has been trying to quell marketplace rumors that it is near bankruptcy (BusinessWeek, 10/09/08).

Renault’s problems aren’cheek by jowl as bad as GM’s. But they’re plenty worrisome. The company has been loss get aground to rivals such as Volkswagen (VOWG.DE), Peugeot-Citroëborn (PEUP.PA), and Fiat (FIA.MI) in Western Europe, its traditional core market. At the end of August its market share in the space stood at 7.7%, a full 2% lower than at what time Ghosn became CEO.

While the popularity of Renault’s low-cost Logan has helped offset the decline, auto sales in Eastern Europe, a key Logan market, are starting to slow being of the class who well-spring. At the opening of the Paris Motor Show last week, Ghosn and other execs declined to reiterate an earlier target of a 4.5% operating skirt this year.

The news from Nissan has been gloomy, over (BusinessWeek, 05/14/08). The Japanese automaker’s American Depository Receipts were trading at $8.52 on Oct. 10, 64% opposite their 52-week high. That compares with Toyota ™, which is ready 49% off its high. Nissan sales in the U.S. also are off this year, but only by the agency of 3.4%—a better deed than Toyota or Hyundai, although not as good as Honda (HMC). Extremely aggressive discounting by dint of. Nissan, including $10,000 incentives on its trucks and SUVs in July and August, mask what would otherwise gain been a more negative consummation.

Despite the growing pressure on automakers worldwide from the credit market and Wall Street meltdowns, Ghosn is still on the plunder to secure a North American alliance partner for Nissan and Renault. And the decimated stock prices and financials of GM, Ford (F), and Chrysler may properly present a buying opportunity at very cheap prices for Ghosn in the coming months. Such moves could include acquiring equity in one of the U.S. automakers.

With instead of a like reason many urgent problems confronting Renault, it makes sense for Ghosn to focus on the big picture and let others vanish things day-to-day, analysts affirm. Besides keeping an observe in continuance Renault and Nissan’s core businesses, the hyperkinetic Ghosn has taken attached a bevy of projects over the past year, including plans for new electric cars and a $3,000 car for the Indian market (BusinessWeek, 05/01/08).

Pélata was an obvious candidate for the COO’s slot. He knows both Renault and Nissan interior part completely, having joined the French automaker in 1984, later moving to Nissan to work with Ghosn in 1999. Earlier this year, Pélata was a key player in negotiating a deal with Russian carmaker Avtovaz to build a car for the Russian market (BusinessWeek, 02/29/08) based on the Logan platform.

Pélata was named head of Renault’s European management committee only last month and had begun taking a more visible role in briefing investors, leading some analysts to consider that he could be in line on account of a promotion. "He’s a good option," says Deutsche Bank’s Toulemonde.