Louis Schweitzer, a top French civil servant and the CEO of the ‘Régie Renault’ from 1992 to 2005, died last Thursday at the age of 83. His importance to the French carmaker can’t be overestimated. He made ‘the Régie’ profitable again and was the father of one of its current cash cows, the low-cost daughter Dacia.
Louis Schweitzer was a perfect representative of what could be called the French establishment. He was a very discreet person, yet omnipresent during his time at the helm, first as a top civil servant, later as the ‘patron’ of the Régie Renault, which was still very dependent on the French state.
Famous family
Louis Schweitzer was born in Switzerland to a brilliant but also broken family. He was the son of a holocaust survivor; his grand-uncle was Dr. Albert Schweitzer, and one of his nephews was Jean-Paul Sartre. He studied at the famous ‘Ecole Nationale d’Administration’ (ENA), where all top civil servants were groomed, later often becoming the big bosses of the nation, in politics or in industry.
Under President François Mittérand, Schweitzer was leading the cabinet of Laurent Fabius, the Minister of Industry, later moving to Budget and then to Matignon (the Prime Minister’s office). At 43 years old, Schweitzer is hired by Georges Besse, then CEO at Renault, who will be assassinated some months later in a terrorist attack.
In the beginning, Schweitzer is not very interested in cars, a financial expert, a little bit lost in a country of engineers. Nevertheless, he became the CEO of Renault six years later, in 1992.
When Louis Schweitzer became CEO, Renault was not the global powerhouse it is today. It was a state-owned French institution, struggling with financial losses, outdated factories, and a domestic focus that felt dangerously small in a rapidly globalizing industry. The company he inherited was on the brink of becoming a cautionary tale.
When he stepped down in 2005, Renault was a profitable, international, and innovative giant, anchored by the most audacious and (at that time) successful automotive alliance in history (with Nissan). This transformation was driven by a quiet, strategic civil servant who became one of the industry’s boldest architects.
The Volvo ‘shock’
In 1992, Schweitzer knew Renault was too French, but his first attempt to make it more international was all but a success. The decision to merge Renault with Sweden’s Volvo, at a time when both groups were building cars and heavy trucks, was brilliant, but collapsed at the eleventh hour.
After Renault and Volvo boards had approved the merger, a green light from Volvo’s shareholders was seen as a mere formality. Nevertheless, on December 2nd, 1993, Swedish shareholders had rejected the deal and thus the merger.
“The breakdown (with Volvo) in late 1993 was a big shock and a major disappointment for me,” Schweitzer said in an interview with Automotive News Europe in 1998. While opposition to the deal led to the resignation of Volvo’s chairman, Per Gyllenhammar, Schweitzer continued to push for change at Renault, even though his grand international plan was derailed.
Renault Vilvoorde
Meanwhile, he continued to clean Renault’s house with a huge cost-cutting plan, empowering his then-deputy, Carlos Ghosn, to execute a strategy that led to the highly contentious 1997 closing of the Renault plant in Vilvoorde, Belgium, which sparked protests and political furor.
Political pressure was so high, from all sides, that Schweitzer had to decide to close its most competitive plant, in Belgium, near Brussels, because he wasn’t allowed to close one down in France. For Schweitzer, it was a baptism by fire, but it was a necessary move to stop the financial bleeding and prepare the company for its next chapter: privatization.
As the 1990s progressed, Schweitzer knew survival wasn’t enough. Renault was a European champion, but it had no presence in the critical North American or Asian markets. The industry was consolidating, and Renault risked being left behind.
The Alliance
In 1999, an opportunity arose, one that most of the industry had dismissed as impossible. Nissan, a Japanese automotive giant twice Renault’s size, was drowning in over $20 billion in debt. It was a failing behemoth that Ford and Daimler had already passed over.
Where others saw a lost cause, Schweitzer saw a strategic opportunity. He believed Renault’s cash (bolstered by his cost-cutting) and product prowess could be a lifeline for Nissan. At the same time, Nissan’s technology and, most importantly, its access to Asia and North America would be the key to Renault’s global future.
In March 1999, Schweitzer made his move. He invested $5.4 billion to acquire a 36.8% controlling stake in the failing company. The auto world was stunned. The French government, still a shareholder, was nervous. The Japanese were skeptical of a foreign ‘conquest’.
Schweitzer understood that a traditional merger would fail because of a clash of cultures. Instead, he proposed an ‘alliance’, a complex partnership in which each company would retain its own brand, headquarters, and cultural identity, while sharing platforms, engineering, and purchasing.
His next move was his masterstroke. He knew he couldn’t run Nissan from Paris. He needed his best operator on the ground in Tokyo, so he dispatched his number two, Carlos Ghosn, to run Nissan.
With fresh cash from Renault, Ghosn’s ability to cut costs and Patrick Pelata’s vision to create new, winning products, Nissan’s turnaround was spectacular in speed and size, sustaining Renault’s earnings with hefty dividends for almost two decades.
Dacia
While the Nissan deal was seen as the masterpiece of Schweitzer’s tenure, a more regional acquisition the same year planted the seeds of an even bigger success in the long term and was a key factor in the recent success of Renault Group. Also in 1999, Schweitzer acquired a little-known Romanian carmaker: Dacia.
His vision was simple: create a reliable, modern, and respectable car for less than €5,000. The result was the Dacia Logan, a small sedan that was anything but sexy but proved its worth in emerging markets and, to everyone’s surprise, became a massive hit in Western Europe as well.
Schweitzer effectively invented the modern low-cost car segment, which Dacia still leads in Europe 26 years later. In addition, a key part of Renault’s international success has been rebranding Dacia models as Renaults outside Europe.
Safety first
The missed merger with Volvo wasn’t the only time Schweitzer’s vision wasn’t properly recognized.
In a lengthy interview at the end of his career as CEO, Schweitzer said he was sad about what he had to decide with the Belgian plant in 1997, and also about not being able to see customers properly appreciate the huge investments Renault made in powertrains and safety.
In 1997, the new Euro NCAP safety assessments were opposed by most automakers, who did not want to invest more than required by the current homologation rules.
Schweitzer instead embraced Euro NCAP and pushed to take Renault’s safety well beyond regulatory requirements, possibly reminiscing about his missed deal with Volvo, a brand always at the forefront of safety.
All in all, the discreet, often quiet Schweitzer was not to be underestimated. At Renault, he was known as ‘Loulou’ or ‘E.T.’ Being educated as a protestant but having become an atheist, the man has always been a quiet observer, flegmatic in all circumstances. “In the end, my strength has been that I seemed more conventional and discreet than I was in reality,” he confessed once in an interview with the newspaper Les Echos.
