THE motor industry’s superstar manager, Carlos Ghosn, faces a hard fight to sustain his plans to revive Renault, the French car company.

The so-called Renault Commitment 2009, published in February last year, is to generate a 32% increase in sales, a 10% reduction in costs, and an operating profit margin of 6% by 2009. Nearly halfway through this programme, Renault shows few signs of meeting these targets.

Ghosn brought Renault’s Japanese alliance partner Nissan back from the brink and turned it into one of the world’s most profitable car companies. In an unprecedented move, in May 2005 he was appointed president and chief executive of both Renault and Nissan.

Ghosn was in London last week to rally Renault’s UK dealers as they prepare for the October 19 launch of the Laguna III, the marque’s top model. The new Laguna is important as the Renault Commitment calls for a doubling of sales in the premium-car sector – which Renault defines as cars costing more than €27,000 (£18,700).

In 2006, Renault’s sales in western Europe fell by 12.4% compared with the previous year. In the first six months of this year its market share fell a further 8%.

But the one strong point in an otherwise lacklustre performance came not from the upmarket bracket, but with a cheap car, the Logan, made in Romania by Renault’s Dacia subsidiary.

The Logan, devised for developing markets, has also been responsible for a 10% increase in sales outside Europe. It is made as far afield as India, Iran, Russia and South America, and gives the only chance of Renault achieving the extra annual volume of 800,000 that Ghosn requires.

Ghosn warned there would be a lull in his plan until more of the 26 new models he promised before 2009 were in the showrooms. The Laguna and the new Twingo small car are the first of these.

Renault has built its reputation on economy cars, but is now anxious to avoid being labelled as a maker of cheap, small models.

Nonetheless, the Logan has done well (at €7,500) in parts of western Europe; already this year, 25,000 have been sold in Germany.

Renault’s UK dealers will not get the Logan before the end of 2008 because the factory can’t keep up with demand from mainland Europe.

A new, €1 billion factory is being built near Tangiers in Morocco. It will not only expand Logan production for Africa and the Middle East but also supply Europe.

Ghosn is also looking beyond the Logan to an ultra-low cost car for India to challenge Tata’s forthcoming model which will cost around £1,200.

Renault has set up a joint venture with Bajaj, the producer of the “tuk-tuk” three-wheeled taxis, to develop a simple, four-wheeled car. It should appear in 2010.

In Europe, the Renault chief foresees the rise of the urban electric car as part of the drive to reduce carbon-dioxide emissions. Within four or five years, he expects an electric Renault city car to be available, using advanced battery technology developed by its alliance partner Nissan in conjunction with the Japanese electronics company NEC.

The new Laguna, which is priced between £15,990 and £24,350, faces tough competition in a declining part of the car market – medium-sized family saloons and estate cars. Renault hopes to sell 20,000 a year in the UK, double the volume of the previous Laguna in 2006.

Among the next new cars to appear will be the Koleos, Renault’s first four-wheel drive sport-utility vehicle, arriving just as such vehicles are being condemned as antisocial gas-guzzlers.

Ghosn believes that, over time, Renault can command higher prices in this part of the market, providing competition for BMW and Mercedes.

A year ago, there seemed a chance that the boss of Renault and Nissan would also take an executive role at General Motors in the USA. Maverick GM shareholder Kirk Kerkorian was promoting the idea of a three-way alliance with Ghosn at its centre. The GM board rejected his suggestion.

Ghosn said last week that an alliance between car companies on three continents still made sense, but there had to be “a common appetite” at all parties. Renault-Nissan, he said, had reviewed the possibilities in the US and concluded that there was no-one that shared its taste for such a deal.

There were sighs of relief, inside and outside Renault. Ghosn already has a punishing workload running two big companies 5,000 miles apart.

If Renault is to achieve its ambitions in the next two years it will need his full attention.

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