Ghosn’s exit shakes tripartite alliance
Future in doubt as creator out of picture
TOKYO: The arrest on Monday of Nissan Motor Co’s chairman Carlos Ghosn by Japanese prosecutors apparently draws the curtain on the nearly two-decade reign of a behemoth of the automotive industry and raises questions on the future of its tripartite alliance with Renault SA and Mitsubishi Motors Corp.
The possibility that the alliance, the world’s biggest automaker in terms of unit sales in the first half of 2018, could merge into a single company seems unlikely now that its creator is out of the picture.
Ghosn’s downfall comes at a pivotal time for the auto industry, with increasing pressure to develop more environment-friendly vehicles, and competition in self-driving technology from the likes of Alphabet Inc and Apple Inc.
Without Ghosn, the alliance now lacks a central figure to rally around. The question is whether the three members can continue to band together to tackle the challenges.
Ghosn was dispatched by France’s Renault in 1999 as part of a capital tie-up to save Nissan from bankruptcy.
Through aggressive cost-cutting measures including factory closures, massive lay-offs and supplier reshuffles, the Brazilian-born executive, who holds French citizenship, buoyed the Japanese automaker’s profits and was promoted to president in 2000.
The French government, the largest stakeholder in Renault, has reportedly been seeking a full merger for the last several years, while executives at Nissan have insisted on maintaining the Japanese automaker’s independence.
The formerly ailing automaker is no longer dependent on Renault, and it has contributed to about 50% of the French automaker’s net income in recent years.
Also, Nissan has been spearheading not only vehicle sales but also the development of electric vehicles in the alliance.
Ghosn’s exit is of concern in France where t he government owns 15% of Renault.
French newspaper Les Echos reported Monday that the European country’s government views that “Ghosn’s presence as the head of the alliance has guaranteed
French (national) interest,” and without him a full merger risks becoming “more complicated.”
Nissan CEO Hiroto Saikawa during a press conference on Monday insisted the alliance would remain intact. But if negotiations go poorly the partnership — in which Renault has a 43.4% stake in Nissan, and Nissan owns a 15% stake in Renault and 34% in Mitsubishi Motors — could even crumble.
“I hope there are constructive negotiations so all parties involved are satisfied,” Japanese Industry Minister Hiroshige Seko said yesterday.
Ghosn’s success gained him celebrity status in Japan, seeing him become a regular on lists of the country’s highest-paid executives and even the subject of a comic book titled The True Story of Carlos Ghosn.
It was shocking, therefore, when news broke he had allegedly violated a financial law by understating his compensation by five billion yen ($44 million) in securities reports — half of what he actually received — over the course of five years.
Nissan also accused Ghosn of “numerous other significant acts of misconduct” including the misuse of company assets for personal purposes, saying it would remove the 64-year-old as chairman later this week following a board meeting.
Mitsubishi Motors, of which he is also chairman, quickly followed suit. Renault, where he is CEO and chairman, called a board meeting where his fate is expected to be discussed.
Nissan is also losing its charismatic leader at a time when it is still reeling from a vehicle inspection scandal that forced it to recall more than one million cars and damaged its brand in the domestic market.
While the automaker is in a much better place than when it was rescued by Ghosn, it remains to be seen if someone can fill the void to be left by the towering figure in the industry.