Renaults COO Carlos Tavares

Renault's COO Carlos Tavares

Renault this morning [28 July, 2011] was very full of the can-do and the must-do. As its new boss and his head bean counter fielded questions from sceptical investment analysts on the half-year financial results, two things became very clear. One: there is much to do. Two: Carlos Tavares, the chief operating officer, is well aware of it.

Nothing could highlight Renault’s deficiency more graphically than the way that the stock market values the company. The current Renault share price tells us that Renault as a whole is worth less than the value of the stake that Renault holds in Nissan. Meaning of course that the great multi national Renault is worth less than nothing.

Tavares is 53 and Portuguese. He has been around Renault a bit. He did the Clio platform and was the Megane project director before doing five years in Japan and America on strategy and general management. Now he has got the heavy burden of shifting the whole alliance onwards. Company CFO Dominique Thormann refers to him lightly as “my new best-friend”.

Renault is second to VW in Europe by volume but Tavares does not accept that as something that cannot be changed.  He likes to rehearse clear objectives and his first objective is to tidy up objectives so that there are fewer of them…or as he put it: “We have a lot on our plate; we need to get the research and development spending under control, we must focus on fewer priorities. Don’t be surprised if you see projects postponed or cancelled.”

His people are passionate enough about creating success, he reckons, but the focus on the business is not good enough.

He also thinks that the team has been under-clubbing the competitive messages. For example, ADAC (the German auto club) recently concluded that Renault quality was also now second only to VW in the European volume segment. “All our cars were rated either good or excellent. This is a message that we should be communicating.”

There should be some quick wins for Tavares. The tsunami-induced component supply difficulties are reducing.  The international spread is improving in emerging markets. China market share is up 80% year on year with dealerships due to more than double to 130 by 2013 and outlets trebling to 130 in India by 2013. The European order book is up 11%. 

His electric vehicles are buzzing and powering ahead in Europe with several hundred on test on the roads with very good feedback and prices now little different to internal combustion engines. “Electric vehicles are not a bet. They are our insurance for the future. Scale production starts in the second quarter of next year. There is a busier cadence of new model introduction over the next three years."

Renault is out of kilter on its petrol to diesel mix in the market – again because of the tsunami which cut off component supply for diesels. Manufacturing capacity is rising and the new group capacity is 3.2m worldwide. One of the debilitating trends in Renault’s markets are the sovereign debt crises… something close to the heart of a Portuguese national.

As a professional test driver and the man who helped create the new Megane, Tavares is ideally suited to the task of getting his car hard up the backside of VW's Golf. If he fails he could be out of the game and spending more time playing it.