Renault-Nissan’s Problem: There’s Only One Ghosn
Carlos Ghosn steps down at Nissan to focus on broader alliance with Renault and Mitsubishi
Carlos Ghosn solved one succession issue at his global auto alliance, tapping a longtime lieutenant to run Nissan Motor Co., but it may take a Ghosn clone to address the rest of the challenges.
Mr. Ghosn said Thursday he would step down as chief executive of Nissan Motor Co. to spend more time looking after the long-term health of the Renault-Nissan Alliance, which faces a revitalized European competitor in Peugeot and a stubborn French government as the largest shareholder of Renault SA.
The alliance, anchored in cross-shareholding between the Japanese and French auto makers, has helped them compete with even larger rivals. In 2015, it reported some $4.5 billion in synergies through shared purchasing and costs, a success that encouraged Mr. Ghosn to add a new alliance member last October by having Nissan take a 34% stake in Mitsubishi Motors Corp.
The expanded three-way alliance will require even more attention now to ensure it works as intended, Mr. Ghosn said in an interview, explaining his decision to hand the reins at Nissan after nearly two decades to lieutenant Hiroto Saikawa.
“We need to make sure the synergies are working and the opportunities are being acted on and it is benefiting each one of the companies,” Mr. Ghosn said. “That’s why I’m concentrating on the alliance.”
He said he would spend more time in Amsterdam, where the alliance headquarters is located.
Nissan, Renault SA and Mitsubishi together sold nearly 10 million cars last year, putting them firmly in the ranks of the world’s largest auto makers.
Concerns about finding a replacement, or replacements, for the 62-year-old Mr. Ghosn become more pressing with each passing year.
“He’s a very special person in a challenging job,” said Julie Boote, an auto analyst at Pelham Smithers Associates in London. “The ultimate target is, at one point, the two groups will merge. That was difficult under Mr. Ghosn and will be even more difficult with someone else.”
Mr. Ghosn said a merger of Nissan and Renault could happen someday if the sides find it mutually advantageous. But he reiterated one condition that could be insurmountable so long as French officials see Renault as a national champion. “Nissan has been very clear during discussions with the French state that they are not going further in terms of a merger, or anything else, with the French state as a shareholder of Renault,” Mr. Ghosn said.
Mr. Ghosn’s personality and workaholic schedule have kept the Renault-Nissan Alliance together over distant time zones and clashing priorities.
He logs hundreds of hours aboard his private jet every month, shuttling between Paris, Yokohama, Japan, and the rest of the world. At Renault’s and Nissan’s headquarters, he compresses a month of work into each week he spends there.
He is meticulous about maintaining the independence of each company he commands, going so far as to keep separate briefcases for Renault and Nissan work, said a Nissan spokeswoman. At the same time, he is an aggressive advocate for the benefits of the partnership structure, pushing the two companies to work together ever more closely.
Among the hardest parts of his job—and the one where he puts his background as a product of elite French education to work—is dealing with politics in France. A boardroom battle at Renault in 2015 nearly upended the alliance after the French government increased its stake in Renault to 20% from 15% to become the largest shareholder in the company and invoked a French law to boost its voting rights. The move spooked Nissan, since Renault owns 43% of the Japanese company.
Some deft political maneuvering by Mr. Ghosn and a threat from Nissan to increase its own stake in Renault resolved the issue, extracting an agreement from France not to exercise its outsize influence on most matters. But with a new president of France set to be elected this spring, the government’s role in the alliance may again be up in the air.
Dealing with a shareholder whose interests go beyond financial performance demands delicacy, Mr. Ghosn said. “We have a market logic, they have a state logic, which is different,” he said. “Obviously, it requires a lot of attention.”
Renault’s profit rose by a fifth in 2016 to €3.4 billion ($3.6 billion) after a large loss booked the previous year from its holding in a Russian car maker was almost entirely erased and European new car sales improved.
Renault doesn’t break out profitability by region, but half its profit came from its stake in Nissan and many car makers struggle to stay in the black in Europe. General Motors Co.’s Opel unit in Europe, which GM wants to sell to Peugeot, has lost on average $1 billion a year for 15 years.
Asked whether he has plans to eventually retire, Mr. Ghosn said: “Not yet. There is only one certainty, that every year you get older. That’s the only certainty in business.”