Renault Rushing to Car Wreck in Russia

Carlos Ghosn personally flew to Moscow last week to invest $1B for 25% of the mafia-infested automaker, Avtovaz. As Putin is re-nationalizing the major industries in Russia, he is fixing them up using some of the same tactics that U.S. private equity firms employ-- and then selling a minority stake to foriegn investors for a tidy profit.

The issue is: Avtovaz is bloated with over 100,000 employees making 736,000 cars last year vs. the effecient Renault with 130,000 employess making 2.43 M vehicles last year. Handing the keys to Russia's lead car maker to Ghosn maybe comparable to the Nissan take over of years back, but this time Mr. Ghosn may not have the backing of Putin, Acvtovaz management, the Russian Mafia, and desparate stockholders as he did when it went to Japan to tell Nissan that it was Renault's way or the "Road"--Plus the sales of 5 "foreign" brands including Chevrolet were up by over 50% in 2007 for a total of nearly 70% market share. Ghosn is going to groan over this deal before the vodka toasts begin.