Why Ghosn must cut himself down to size

Christian Streiff, who this week takes over the wheel at Peugeot-Citroën, is already being fêted by the car industry as the right man to revive the French group’s flagging fortunes. Barely two years ago, the same industry analysts gave a similarly enthusiastic welcome to the arrival of Carlos Ghosn at Peugeot’s domestic rival, Renault.

Mr Streiff still has everything to prove. But he could already learn one or two useful lessons from Mr Ghosn’s recent difficulties that are starting to take the shine off his carefully nurtured image as one of the world’s most dynamic and successful managers. After all, Mr Ghosn has long basked in the glory of his cost-cutting achievements at Michelin, Renault and then at Nissan, where he brought the Japanese manufacturer, now 44 per cent owned by Renault, back from the dead.

In Japan, he has become an icon, an industrial samurai and a manga comic superhero.

It was always obvious he would eventually take the top job at Renault, but less obvious was his decision not to give up being chief executive of Nissan as well. Even more surprising was his confidence that he had enough time and capacity left to add a US giant to his portfolio by including General Motors in the Renault-Nissan alliance. Presumably, he would also have run the new American partner had a deal been done.

But Mr Ghosn – for all his undisputed management talents – is also, after all, human. Last Friday he acknowledged as much by issuing an embarrassing profit warning at Nissan, saying the Japanese company now faced a “crisis of performance” and suggesting that he may have to reconsider his double role at Renault and Nissan.

Renault itself is in trouble and, as long as he shows no concrete early results, his reputation too is on the line. So far, investors have given the so-called “Ghosn factor” the benefit of the doubt and the celebrity manager has bought himself some time by targeting 2009 as the year of recovery when Renault should be selling 800,000 more cars around the world and more than double its profit margin to 6 per cent.

But a couple of new factors have come into play. First, no one expected Nissan, which contributes at present about 60 per cent of Renault group profits, to stall just as Renault is still struggling to rev itself up. Second, Mr Ghosn has a hungry new domestic rival anxious to prove he can revive Peugeot-Citroën. Indeed, the stakes are even higher for Mr Streiff to make his mark since he has already lost two top jobs (at Saint-Gobain and Airbus) and can hardly afford another flop.

Mr Ghosn may have got carried away with his own impressive track record. Yet he already seems to be cutting his global ambitions down to size by no longer openly advocating the idea of a US alliance either with GM, Ford or Chrysler. He must now be thinking that his energy and attention should increasingly be devoted to resolving one problem at a time, rather than juggling continents and oceans to feed his globetrotting appetite.

Mr Ghosn currently spends one week a month in Japan and no doubt has spent a good deal of time in the US recently.

Now, perhaps, the time has come to settle down in France and hand over Nissan to another chief executive, before his samurai image is undermined in Japan and before Renault goes seriously into reverse.

Berlin bank sale

The auction of Landesbank Berlin, which owns the Berliner Sparkasse savings bank, finally gives private banks an opportunity to put their money where their mouths have been for so many years.

The private banks have long argued that protection of the publicly owned savings banks created an unfair competitive landscape and that they should be allowed to consolidate the market. Now, a Sparkasse has finally emerged on the block.

That as many as 19 institutions, including foreign banks and private equity companies, have declared an interest in bidding for the bank shows the strong interest in Europe’s most fragmented – or over-banked, depending on who you ask – banking sector.

They could face stiff competition. The German savings banks association (DSGV) is mounting its own bid in a last attempt to keep the Sparkasse brand away from the private sector, after they lost the political tussle with Brussels. Other public banks are also in the running.

But the private banks have more to gain. The listed German banks’ share of their domestic retail market is very small compared with rivals in most other European markets. The opportunity to gain the leading position in the capital with some 2m customers should encourage the private banks to flex their muscle.

If they don’t, their consistent arguing over the years would attain a very hollow ring – especially since the next opportunity to buy a Sparkasse may be years away. The current sale is only taking place because the bank’s owner, the city of Berlin, is being forced to sell and there is no queue of other German savings banks waiting to be taken over by private players.

ivar.simensen@ft.com

european.view@ft.com

Format wars

There was a signal moment back in 1988 when, with as much dignity as it could muster, Sony rolled out its first VHS video cassette player. Its more sophisticated technology, Betamax, had already lost the notorious “format wars” to JVC some years before, but Sony grimly delayed the admission.

But nearly two decades since its marketing triumph on VHS, JVC, the brand of Victor Co of Japan, may face a similarly miserable decision – of whether to remain a maker of televisions.

What finally overcame Sony’s pride on Beta/VHS was the more pressing 80s and 90s market reality of consumer electronics: your brand’s strength was built, lived and died in the sitting room.

Things have changed somewhat – electronics brands can now be built in the pocket, the carry-on bag or next to the dashboard, but JVC (and the rest of its Japanese rivals) cannot chase the sitting room mindset out of their boardrooms. For JVC it is worse, because it remembers halcyon, pre-DVD days, where its format was ubiquitous.

JVC’s problem is not in the pocket or dashboard – it is actually very good indeed at camcorders and in-car equipment. Its problem is TVs. It makes perfectly good flat-panel machines, but cannot enlarge their screens or improve their image definition at quite the pace the market commands.

Matsushita, with restructuring issues of its own, may be ready to offload its 52 per cent stake in JVC, perhaps handing control over to a no-nonsense private equity buyer. The 20-year anniversary of Victor’s VHS victory may be marked by a move away from the sitting room.

leo.lewis@ft.com

Size matters

If you were betting on the direction of house prices, you would be brave to bet against housebuilders, who see the whole chain of the housing market, from open fields that are just a glint in the developer’s eye to the moment when the keys are handed over to the first owners.

Overstretched UK mortgage-holders should not, however, read too much into the fact that Barratt Developments, perhaps the best-known British housebuilder, has taken on and defeated rival Wimpey in a hard-fought bid for Wilson Bowden, or that two other builders, Galliford Try and Linden Homes are in takeover talks, or that a new suitor has emerged for Countrywide, the UK estate agency.

The main reason Barratt can pay up – and take a sanguine view of a housing market that others think has become rather frothy – is that it is a specialist. It can judge better than most the value of the strategic land bank it will acquire, while the geographic fit, the addition of Wilson Bowden’s commercial development business, and the integration of experienced middle management will add strength to the group at a time of industry consolidation. Barratt’s size also means it can trim its sails if the UK market gets stormy by, say, cutting back on land purchases. Only a few of those exposed to British house prices can boast such flexibility.

andrew.hill@ft.com

world.view@ft.com

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