Renault-Peugeot link could give Sarkozy a champion

Carlos Ghosn has not given up hope. The chief executive of Renault and Nissan continues to believe that a trilateral tie-up between his French and Japanese car groups with General Motors is “inevitable”.

There are no new negotiations taking place with the US manufacturer and none is likely in the immediate future. Renault and GM considered forging a transatlantic alliance but abandoned discussions last year, largely because GM’s management was not convinced this was in the best interest of the US company.

Yet, Mr Ghosn still thinks the strategy makes sense in the long term. He said so in a recent French newspaper interview although acknowledged there seemed little appetite for such a move at GM right now. He also suggested he was not interested in acquiring Volvo or Jaguar, both owned and put up for sale by Ford.

So, while he waits for his recalcitrant American sweetheart to make up her mind, he is focusing on Renault’s Commitment 2009 plan and Nissan’s Value Up project – both designed to improve margins and make the two more competitive.

His domestic rival, Peugeot-Citroën, is also engaged under Christian Streiff, its new chief executive, in a similar exercise, dubbed Cap 2010, to reduce costs, develop models more quickly and double profits.

The problem for both French car manufacturers is that they continue to struggle in an oversaturated European market where they are facing tough competition from resurgent rivals such as Volkswagen and Fiat.

Under the circumstances, can France afford the luxury of two volume manufacturers? The idea of combining Renault and Peugeot has so far been a taboo subject. The rivalry between Renault, a former state-owned company in which the government still owns a 15 per cent stake, and family-controlled Peugeot has traditionally been fierce. But merging the two to create a single, more competitive French champion could be just the sort of move that would fit in with President Nicolas Sarkozy’s proactive industrial policy designed to promote new French global leaders.

Peugeot in the past has always treasured its standalone strategy. Mr Streiff, however, has hinted this could change with the group becoming more open to alliances and mergers. As for Mr Ghosn, instead of continuing to woo his American girlfriend, perhaps he should start turning his attention to the girl next door.

Italy’s warning light

It is unusual – and indeed quite refreshing – to see the head of a large European state-controlled company put his political masters on the spot.

Fulvio Conti, the chief executive of Enel, Italy’s electricity giant, could easily have sat back and rested on his laurels after this year pulling off two of Europe’s biggest energy deals against fierce German competition. After all, Enel outmanoeuvred Eon in the long campaign to take over Spain’s Endesa and then in the auction for Russia’s OGK-5 electricity generator.

These deals have earned Mr Conti plaudits in Rome after being criticised for an earlier attempt to acquire the energy assets of Suez, the Franco-Belgian group. But his recent successes seem to have emboldened the polyglot executive to attack central and regional government foot-dragging in approving the construction of the re-gasification plants Italy urgently needs to avoid the risk of another blackout this winter.

Mr Conti’s concern is understandable. Back in 2003, Enel was criticised after Italy suffered widespread blackouts as a result of insufficient generating capacity. Enel and other domestic competitors have since been investing in new power plants to meet increased demands.

Most of this has been gas-fired. New nuclear capacity is outlawed in Italy, cleaner coal-fired plants have been fiercely opposed on environmental grounds and wind power only seems to be flourishing in Rome political circles.

The problem now is that the new power stations ready to come on stream are struggling to find enough gas to operate them. This is all because of the political delays in approving the construction of facilities to transform imported liquefied natural gas back into gas.

At least nine re-gasification plants are still awaiting approval. Meanwhile, LNG is shipped from North Africa to France, where it is re-gasified and then sent to Italy.

So far, Mr Conti has received support from Pierluigi Bersani, industry minister, but the rest of the political establishment, both in the regions and in Rome, continues to waver, finding Mr Conti’s plain speaking somewhat irritating and uncomfortable. He can perhaps take a little comfort from a more understanding audience when he addresses his industry peers in London ton Wednesday at the World Energy Council.

european.view@ft.com

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