It was during a press meet at the Geneva Motor Show last year when Carlos Ghosn, the Chairman of Renault-Nissan reiterated that the global Numero Uno status was not his group’s priority. It has finished third in 2016 with 9.96 million units, with Volkswagen and Toyota in the top two slots.

Just a little over a week ago, Ghosn was equally categorical at a parliamentary committee hearing in Paris that the Renault-Nissan combine had emerged the world’s top carmaker with over 10.6 million units even while VW had already reported sales of 10.74 million vehicles. This included nearly 2,00,000 units of heavy truck sales from MAN and Scania, part of the VW group, which Ghosn implied could not be factored in as a comparable figure to Renault-Nissan’s sales.

Toyota is tipped to be in the third place for 2017 with 10.35 million units even though it is clearly not in the numbers game. The company is more focused on meeting other challenges in the new mobility arena, which include electrification, clean fuels, autonomous cars and so on.

Ghosn had, likewise, made it quite clear at Geneva that being right on top of the global rankings was not some obsessive goal. The more important thing was to ensure that nobody had an advantage over Renault-Nissan in terms of scale.

From his point of view, 2016 had seen the alliance report sales of nearly 10 million units last year even though “our friends from Mitsubishi” did not deliver a spectacular performance with their numbers down by 1,00,000 units. And while Ghosn conceded that the top player slot was good for employee motivation, it did not directly affect business and was therefore not very significant.

Yet, the fact remains that 2017 has ended on a great note for Renault-Nissan, which will now leverage Mitsubishi to take the growth story forward. It is also betting big on China as part of its roadmap for the next five years. Mitsubishi has its strengths in the ASEAN region and it will be interesting to see if it will become part of the Renault-Nissan portfolio in India too post 2020.

Challenges ahead

Being the top global carmaker is no mean achievement (even while VW may stake a claim here too) and Renault-Nissan will have enough reason to feel pleased with its 2017 showing. Yet, there are a host of challenges to reckon with in the coming years, which will typically see the men being separated from the boys.

Across the world, emissions have become a subject of intense debate and carmakers are pulling out all the stops in looking for cleaner options. Massive investments are being earmarked for new technologies even while growth opportunities are constantly being explored in emerging markets such as India, Latin America, ASEAN and South Africa.

Eventually, the objective is to be ahead of the curve in meeting clean air regulations and preparing for an era where growing urbanisation in emerging markets is posing new challenges in mobility. Carmakers are also aware that vehicle ownership is under pressure thanks to easier options such as Uber, which eliminate needless overheads like parking charges and driver salaries.

None of these issues will be lost on the likes of Ghosn who stands tall in the auto industry and is almost revered even today for the Renault-Nissan alliance, which happened nearly two decades earlier. Mitsubishi was more recent in 2016 and the goal would be to consolidate strengths and focus on more synergies in costs and platforms.

Frugal engineering has been Ghosn’s pet theme and it is well known now that it was he who acknowledged the importance of the Tata Nano as a true people’s carrier. It inspired Renault to look at a cost-competitive offering that led to the creation of the Kwid in India.

Yet, the reception to a similar costing drive with Datsun did not yield the same results and Ghosn admitted as much during the Geneva meeting. “We are not as successful with Datsun as we would like it to be without any doubt. But this is a long-term strategy and we don’t think success will come immediately,” he said.

According to him, the key was to constantly push the envelope, especially in markets like India where making profits take time. “We have to keep trying and the success of Renault today as the top European brand in India follows many failures,” said Ghosn. “Nobody succeeds in new markets immediately.”

As he put it, it was important to learn from failures, accept them and try again particularly in India, “which is complicated and competitive”. He will be hoping to replicate the feat with Mitsubishi in a global landscape that has changed dramatically from the more predictable times of the Nissan alliance.

Chinese brands

Today, China is calling the shots in a big way and is keen that its own homegrown brands set out to conquer the world. It is clearly not content being the world’s largest producer of cars where a host of local companies have tied up with the world’s biggest automobile brands.

Things are a lot different today, especially after Geely’s successful growth story following the acquisition of Volvo Cars. It is now the single largest shareholder in Volvo Trucks too, which now puts the Chinese auto industry in a far more dominant position as a world player.

Small wonder then that consolidation has become the name of the game for carmakers in an arena where only the fittest will survive. Japan is seeing a host of domestic brands joining hands right from Toyota and Suzuki to Honda and Yamaha. Mitsubishi is, of course, part of Renault-Nissan while Mazda and Toyota have also come together for an electrification alliance in North America.

Fiat’s acquisition of Chrysler and the subsequent birth of FCA has been a huge success story, especially with Jeep. Yet, this did not stop the company from reaching out to General Motors for merger talks. Meanwhile, Chinese automakers such as Great Wall Motors explored the possibility of acquiring Jeep even while no formal talks kicked off with FCA.

With a new world order clearly imminent with the rapid rise of China, top rankings may really not be so relevant in the coming years. Toyota, for one, has opted to focus on what it believes are far more important issues and the fact that it is now in the third spot does not remotely diminish its standing as a top global brand. Hyundai has proved its mettle as a top Korean global brand, which is growing from strength to strength.

VW was singed in the diesel scam of 2015 but has hung in there while posting record numbers to stay in the top league over the next two years. Now, it is the turn of Renault-Nissan but increasingly the leadership stakes will be redefined where only the smartest and the most proactive will stay ahead of the rest.

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