Ghosn says Nissan, Renault running below potential

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CHIBA, Japan, Oct 25 (Reuters) Carlos Ghosn says both the companies he runs are performing below their potential operating margin, and he is bent on kicking them into shape.

''I consider that at Nissan, below 8 percent it is badly managed, above 8 percent it is well-managed. It is as simple as that,'' Ghosn told a media briefing on Thursday.

Nissan, the Japanese carmaker in which France's Renault has a 44 percent stake, slipped to an operating margin of 7.4 percent in fiscal 2006/07, which Ghosn called 'dramatic' even if it was better than many other firms.

''I think the potential for Nissan is much higher than 8 percent,'' Ghosn said. ''We are going to keep this company in the top level for competitiveness and profitability,'' he added.

At Renault, Ghosn has set a margin target of 6 percent for 2009.

''You don't get to a margin of 8 percent like this,'' he said, snapping his finger. ''It is quite an operation.'' Under its Commitment 2009 plan, Renault aims to move from an average operating margin of 4 percent to 6 percent by 2009.

''Clearly, I'm telling you that I am not going to stop there.

But before I'm saying what we are going to next, first we have to get the 6 percent,'' he said.

ELECTRIC CARS Ghosn said he saw great potential for electric cars for use in big cities. ''For downtown, urban driving I think it is going to be the main answer. For us that is obvious, but it is going to take some time,'' he said.

He discussed various problems that still need to be solved related to the charging time and autonomy of batteries, and envisaged a system in which people own the car but not the battery and swap empty batteries for full ones.

He estimated that in Europe some 20 percent of cars are mainly used for urban driving. ''There is a huge potential for electric cars,'' he said.

Ghosn said he believed that carmakers needed to offer a large range of vehicles, from cheap ones through to expensive models.

At Nissan this meant on the one hand looking for a very cheap commercial vehicle with Ashok Leyland of India and a cheap passenger vehicle based on Renault's no-frills Logan car. But also launching the GT-R sports car and the Infiniti luxury brand.

''A carmaker cannot only have rational cars, clean and economical. It also needs passion cars,'' Ghosn said.

REUTERS SR BD1235

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