Crunch decade for car industry
As Carlos Ghosn flees Japan, Nissan and its rivals face . . .
by James Salmon THE dramatic escape of former car boss-turnedfugitive Carlos Ghosn from the clutches of Japanese authorities is worthy of a potboiler thriller.
Yet there is an intriguing sub-plot, which reflects a global car industry in flux and the enormous pressures facing manufacturers.
And it makes for rather more sobering reading than the story of Ghosn fleeing by private jet to Beirut.
The 65-year-old former boss of the Nissan and Renault car alliance was under house arrest in Tokyo and awaiting trial on a string of corruption charges.
But he has maintained his innocence since he was arrested in November 2018 at Tokyo’s Haneda airport as he stepped off his private jet.
He is accused of understating his income by £61m and siphoning off millions of pounds from Nissan to finance his lavish lifestyle and pay for luxury homes around the world.
Speaking from his Tokyo prison, where he spent 108 days behind bars, the tycoon last year said he had ‘no doubt’ that the legal charges against him were the result of ‘ plot and treason’ by Nissan management.
He insisted they were fiercely opposed to his plans to further integrate Nissan, Renault and Mitsubishi, which would give him even more power.
Under the Renault-Nissan alliance, spearheaded by Ghosn in 1999, Renault has a 43pc stake in Nissan, but Nissan only has a 15pc holding in Renault.
Nissan officials are said to be increasingly frustrated that Renault has the upper hand, despite Nissan rapidly outgrowing its French bedfellow, and making most of the profits.
Professor David Bailey, a senior fellow at Birmingham Business School, said Ghosn’s claims of a Machiavellian plot against him are ‘ entirely credible’, whether or not he is guilty.
He said: ‘I think it is very likely there was a coup to oust him to prevent a full-blown takeover of Nissan by Renault.’
Although he quickly pointed out that Nissan’s profits have plunged more recently due to a slowdown in demand and spiralling costs, he said: ‘ There was bad feeling at Nissan that Renault had the control while it generated most of the profits.’
But, while many will understand the frustration of Nissan executives, few in the industry will argue with the pressing need for closer collaboration.
There has been a slump in car sales as the global economy slows and the trade war between the US and China takes its toll.
Car makers are reeling from a backlash against diesel, tougher emissions standards and ambitious targets to cut emissions to tackle climate change.
The result is that they are having to spend vast amounts on switching to electric engines while profits and sales fall.
Manufacturers in the UK have to navigate Brexit and the threat of tariffs and customs checks if Boris Johnson fails to secure a deal with the EU.
Among those in the firing line is Nissan, whose giant plant in Sunderland churns out its popular Qashqai and Juke models.
The pressure to join forces manifested itself most recently with the £38bn merger between the French owner of Peugeot and Vauxhall – PSA Group – and Italian-American Fiat Chrysler.
The tie-up will give it the firepower to invest in electric and autonomous cars. Indian-owned Jaguar Land Rover, the biggest car manufacturer in Britain, and Germany’s BMW have joined forces to develop electric cars.
Professor Bailey said: ‘There is likely to be more pressure for consolidation. I would expect the relationship between Jaguar Land Rover and BMW to deepen. But the saga with Carlos Ghosn also raises the big question about where the Renault-Nissan alliance will go next.’
He suggested there may be a ‘rebalancing of power’, with Nissan taking a bigger stake in Renault. While it would be deeply unpopular with Japanese officials, Ghosn may well be right: a full merger between the two uneasy allies might help them cope with the challenges of the 2020s.