PARIS -- The automaking alliance of Renault, Nissan Motor and Mitsubishi Motors will re-examine its sales target of 14 million cars worldwide by 2022, Renault Chairman Jean-Dominique Senard said, indicating a retreat from former chief Carlos Ghosn's hard-driving pursuit of scale.
"In the coming months, we will be redefining the objective depending on confirmed elements," Senard said in a joint interview with Nikkei and French newspaper Le Figaro.
The changes come as alliance workhouse Nissan faces slowing sales in China and the U.S., the world's two largest auto markets.
Since taking office on Jan. 24, the former CEO of tiremaker Michelin has been eager to close a rift that emerged between the French and Japanese automakers after Ghosn's arrest in Japan last November on financial misconduct charges. Senard also became the head of a new decision-making board for the alliance launching in late March.
The Renault-Nissan alliance was formed in 1999 as a lifeline for the struggling Japanese automaker. With Nissan's reorganization completed, Ghosn became the leader of both Renault and Nissan in 2005. In that role, he pushed to maximize economies of scale by sharing production centers and standardizing parts across the automakers. The alliance's sales topped 10 million after Nissan brought Mitsubishi into the fold with an investment in 2016.
Nissan was rebuilt under the lofty goals envisioned by Ghosn. The three automakers's midterm plan aims to boost combined annual sales by 40% from 2016 to over 14 million vehicles in 2022, lifting annual synergies to 10 billion euros ($11.3 billion). These aggressive targets, however, have begun to take a toll on the alliance.
The alliance's focus on global sales led Nissan to neglect investment in Japanese factories and staff, resulting in a scandal around improper vehicle inspections. Nissan's earnings, meanwhile, have suffered from declining profitability in North America as it prioritizes expanding its market share there. The alliance will likely downgrade its sales target given Nissan's struggles in the U.S. and China.
Senard admitted that the French government, Renault's top shareholder, urged him to make its alliance with Nissan irreversible -- though not necessarily in those exact words.
"I don't have any concerns about [government] interference in terms of the freedom I have to do what I have to do," he said, adding that his priority is to improve the alliance's efficiency. He indicated that Paris would understand his position not to rush a possible merger.
"If we lessen the alliance to a sum of synergies, it's fine, but it won't do much to engage our teams," Senard said. "We need to redefine the alliance's purpose."
Without directly criticizing Ghosn, Senard called for a return to the alliance's founding philosophy, "which means taking the respect of cultures and companies into account and working together to maximize efficiency."
Nissan and Renault have expanded the number of areas where they work together on the principle that both sides benefit, such as the collective purchasing of parts to reduce costs.
But in recent years, under Ghosn's leadership, "collaboration for the sake of meeting the alliance's numeric objectives had increased excessively," said a Nissan executive.
Take, for example, the decision to shift production of Nissan's compact Micra car from India to a Renault factory in France. "The impact on Nissan was not sufficiently considered," the executive added.
As for the French government's merger proposal, Senard said: "I'm not dealing with it today. If I were to talk about a merger, it would be to talk about the intelligent merging of our cultures to make the alliance very efficient. All other ideas would not be relevant. "
The French government owns 15% of Renault and appoints directors to its board. It has intervened in appointing Renault leadership and could demand a hastier merger.
"All shareholders have the freedom to speak, but when there's a person with a mandate, you have to let the person finish the mandate till the end," Senard said. "I haven't had any difficulty having that point understood."
Senard is also expected to become a Nissan director at the automaker's extraordinary shareholders meeting on April 8 and a vice chair at June's regular shareholders meeting.
"I won't just sit and listen to what others tell me" at Nissan, he said, adding that the economic future of the alliance is on the line.
Nissan's net profit is expected to sink 45% to 410 billion yen ($3.68 billion) for the fiscal year through March. Renault derives about half of its net profit from Nissan.