French government secretly raises its stake in Renault and passes new laws in a bid to influence the firm’s operations

Renault has been plunged into direct conflict with the French government after the government changed shareholding laws and then spent £880 million increasing its stake in the car manufacturer to 20%.

There is reportedly great concern within the Renault-Nissan Alliance about the French government’s level of influence because Renault also owns 45% of Nissan and effectively controls its successful Japanese partner.

Carlos Ghosn, CEO of the Renault-Nissan Alliance, was described in reports as being “furious” after he was out-manoeuvred by the French government in a conflict over new laws concerning the voting rights of long-term shareholders.

Ghosn had been in long-standing negotiations with 
the French government to 
try to prevent these new 
‘anti-speculation’ laws from being applied to the Renault-Nissan operation.

The French government introduced the new legislation earlier this year. It is intended to give shareholders double voting rights if they have 
held the stock for more than two years.

While Ghosn was in tense negotiations with the government, the state secretly increased its shareholding in Renault from 15% to 20%.

This stake was then unexpectedly used by the government to prevent Ghosn from passing a resolution to restrict Renault shareholders to ‘one share, one vote’.

The French government’s move to have more influence over Renault is likely to have been driven mainly by the 
fact that the vast majority of the best-selling Renault and Dacia models are now made outside France.

The French government has vowed to prevent its domestic manufacturing base from being hollowed out, although many analysts say France has notably high labour costs, which are putting its manufacturing industry under great pressure.

Moreover, Nissan’s success has meant that it is substantially outselling its French parent company. Of the 8.47 million cars sold globally by the alliance in 2014, just 2.7m came from the Renault/Dacia/Samsung brands.

The greater use of shared platforms and factories will make it easier for future Renault vehicles to be built outside France. Indeed, the highly successful Captur compact crossover is made in Spain, as is the upcoming Kadjar crossover. The 
Kadjar will also be built at Wuhan in China.

Even the current Mégane hatchback is made outside France, although the Scénic MPV is made on home ground. Although the new Espace and Laguna will be built in France, they are unlikely to be as big-selling as Renault’s small cars.

It’s not known if the French government will use its boardroom influence to prevent other new models from being built overseas. However, it seems possible it could argue that the next-generation Mégane should be built in France after the Captur and Kadjar were allocated to Renault’s Spanish plants.

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Comments
16

19 May 2015
At least they still have a stakeholding in a national OEM. Rather that than being sold by the shareholders to a corporate majority shareholder with no interest in the brand.

19 May 2015
Michael Knight - unless you are a blind socialist ideologue that comment is probably mistaken. Why on earth would you want a British government involved in our industry? The history of the UK motor industry shows that British govt support was generally harmful. The suggestion that HMG should get involved in, for example, Jaguar Land Rover is risible. The French government would be better advised to work to reduce labour costs by ending the left-wing policies that have brought the country to the edge of collapse. Interfering in management while undermining that management's ability to control labour costs is less than helpful.

19 May 2015
Yet, in the US, the land of capitalism, the big three had bailouts. This is the thing with anti-state marketeers, they insist on complete freedom of capitol, complain about the restrictions required by the state, as you have alluded too by the pesky wage-costs demanded by those annoying unions, yet gladly take tax-payers money when they're 'too big to fail'. Just like the banks. Free-market ypocrisy at its finest...

19 May 2015
Jaguar Land Rover are doing far better under the control of an Indian firm than they were doing in their last 15 years under control of the British Goverment. Even though they like you to think is still ultimately still a fully British controlled car company. The irony!

 

Hydrogen cars just went POP

19 May 2015
It's not just company's like Renault that get hollowed out and asset stripped, this is part of a Global Asset Stripping that is happening across the world, We are seeing it in the UK on an industrial scale with tax payers money being fed to private corporations, NGO's & banks, unhindered by a Lib Dem influence in government we can only assume that things will get worse.

 Offence can only be taken not given- so give it back!

jer

19 May 2015
For those that work for French acquired companies such Peugeot and Orange they'll be familiar with the arithmetic that many inefficient jobs in France is compensated for by making people redundant in any other country. Can't say they don't look after their own. I wonder about single market state intervention.

19 May 2015
Indeed, having a mildly socialist government is not conducive to the efficient running of a car manufacturer. It is worth nothing that without the dividends from their shareholding of Nissan, Renault would have made a significant loss last year. Nissan is keeping the Renault, and the alliance afloat...

19 May 2015
Gerhard wrote:

Indeed, having a mildly socialist government is not conducive to the efficient running of a car manufacturer. It is worth nothing that without the dividends from their shareholding of Nissan, Renault would have made a significant loss last year. Nissan is keeping the Renault, and the alliance afloat...

What absolute cobblers. It's this kind of horseshit that perpetuates myths.
Germany, social democrats, comparatively high personal taxation, yet unbeliveably it has the most successful car company group in the world!
The USA, ultimate capitalist economy; big three bailed out in 2008.

19 May 2015
I do like the idea that Clegg & Co. would have saved the world. 'We can only assume that things will get worse' <-- that's the spirit. Sit back and let everyone else do it for you and then when you don't like how the world turns out you'll have something else to moan about and someone else to blame. Lady Thatcher, probably. It usually is.

19 May 2015
also think on a car blog it's better to keep any form of political discussion out of the conversation unless it directly relates to the motor industry. Socialist ranting doesn't really fit in here I don't think.

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