By Nick Kostov and William Boston
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (January 28, 2020).
Renault SA is planning to name former Volkswagen AG executive
Luca de Meo as its chief executive at an extraordinary board
meeting this week, according to people familiar with the matter, as
the French auto maker seeks to get past the Ghosn scandal and
reinvigorate its alliance with Nissan Motor Co.
Mr. De Meo's move to Renault, subject to a board vote, has been
widely expected in the industry after Volkswagen said earlier this
month that the 52-year-old Italian was stepping down as head of
Seat, its Spanish auto unit. Under his leadership, Seat returned to
profitability and became one of the German auto maker's
fastest-growing brands.
Renault has had two CEOs since Carlos Ghosn's arrest in Japan in
November 2018, resulting in his resignation as the head of the auto
maker. The post has been held on an interim basis since October,
when Renault's board ousted the chief executive at the time as part
of wave of departures of executives who were close allies of Mr.
Ghosn.
Tensions between Renault and Nissan -- which Mr. Ghosn also once
headed -- have been strained since his arrest in Tokyo on
allegations of financial misconduct, which he denies.
Mr. De Meo's appointment was delayed by protracted negotiations
between Renault and Volkswagen over the terms of his departure, the
people said. As a result of a noncompete provision, Mr. De Meo
won't be starting at Renault immediately, one of the people said.
It couldn't be learned when exactly Mr. De Meo would take the
reins.
The auto executive will arrive at a difficult time for Renault,
with its shares at their lowest point in more than seven years and
profit shrinking as sales in some key emerging markets are on the
wane. Meanwhile, Renault's relationship with Nissan has been
strained by battles over the direction of the 20-year-old
alliance.
Decision making on that score has slowed since the arrest of Mr.
Ghosn, who forged the partnership. Last month Mr. Ghosn fled to
Lebanon, saying he couldn't get a fair trial in Japan.
One tricky issue confronting Mr. De Meo will be the future
structure of the alliance. The two auto makers are bound by a
shareholding arrangement that Nissan has long complained favors
Renault. The French company owns a 43.4% stake in Nissan, while the
Japanese company owns a 15% nonvoting stake in Renault. The two
partners tried to hammer out a new agreement in secret negotiations
last summer, but failed to find a compromise.
Jean-Dominique Senard will remain Renault's chairman, as well as
chairman of the alliance, people familiar with the matter said.
For Mr. De Meo, taking the job at Renault is something of a
homecoming. He launched his auto-industry career at the company,
before continuing his journeyman years with a stint at Toyota Motor
Corp. The Milan native then went to work for Fiat, where he ran the
Lancia, Fiat and Alfa Romeo business units and headed Abarth &
C. SpA, the Italian auto maker's racing unit. He also served as
Fiat's chief marketing officer, and was a driving force behind the
successful revival of the Fiat 500 as a retro model.
Mr. De Meo was hired by Volkswagen to run sales and marketing of
the VW brand in 2009, around the time the German car maker was
preparing a new series of small cars in its bid to become the
world's biggest car maker within 10 years. Volkswagen poached
several executives from Fiat for their expertise in designing and
marketing small cars.
"We are very, very sad that Luca is leaving us because he played
a very important role in the group," Volkswagen CEO Herbert Diess
said during an interview with CNBC that was televised from the
World Economic Forum in Davos, Switzerland, last week.
Mr. De Meo joined Volkswagen when the car maker was pursuing a
"clean diesel" campaign to promote its lineup as more
environmentally friendly. Then in 2015, U.S. authorities disclosed
that Volkswagen had rigged diesel engines to cheat emissions tests
and charged the company with violating U.S. environmental laws and
committing fraud. Mr. De Meo was never identified as an insider in
Volkswagen's own investigation and hasn't been charged or named as
a suspect in any criminal investigation in connection with the
scandal.
As a salesman, Mr. De Meo, who speaks five languages, has always
had an eye on the young, trend-focused consumer. He pushed
Volkswagen in 2010 to become the first auto maker to offer a
branded app, timed with the European debut of the Apple iPad. When
launching the New Beetle at Volkswagen in 2011, he described the
target audience of the model's revival as an "I have a Mac
person."
When Volkswagen installed him at Seat in 2015, Mr. De Meo began
immediately to reshape the struggling Spanish car maker into a
sexy, youthful brand, targeting new customers outside the
Volkswagen group in Southern Europe, Northern Africa and
Germany.
To capture the growing African market, and challenge rivals
Renault and Peugeot, Mr. De Meo oversaw the opening of Volkswagen's
first factory in the region.
He also convinced Mr. Diess to let Seat create its own luxury
offering, intending the Cupra brand in part to challenge the
expansion of Renault and Peugeot into the premium segment.
Under Mr. De Meo's tenure, Seat became profitable for the first
time in more than a decade. Last year, the company sold 518,000
vehicles, an increase of nearly 11%. It reported sales of EUR10
billion ($11 billion), up 3%, and boosted pretax earnings 33% to
EUR254 million.
Mr. De Meo was well-liked and respected at Volkswagen, but if he
had his sights on the top job he likely would have had to wait. Mr.
Diess turned 60 in October and has strong support as CEO from the
company's core shareholders and labor representatives.
Volkswagen also has never had a non-German CEO, and Mr. De Meo
faced internal competition from the likes of Porsche chief Oliver
Blume.
Write to Nick Kostov at Nick.Kostov@wsj.com and William Boston
at william.boston@wsj.com
(END) Dow Jones Newswires
January 28, 2020 02:47 ET (07:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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