Ghosn's arrest spreads disarray among Renault and Nissan executives
Turmoil at the helm of the alliance comes at a critical moment, when car makers across the globe are wrestling with a wide range of challenges
Renault and Nissan’s alliance is threatened with disarray over a rift about how to fill a leadership vacuum as its chairman, Carlos Ghosn, remains in custody in Japan.
Executives overseeing the alliance based in Amsterdam are scheduled to meet on Thursday for the first time since Mr Ghosn was arrested last week, on allegations of understating his income and misusing company assets. Nissan chief executive Hiroto Saikawa and others may attend by video conference, according to sources.
Mr Ghosn remains chairman of the partnership, which includes the smaller Mitsubishi Motors. In his absence, one option suggested by Nissan is to split the top job at the joint entity between the three companies, said one of the sources. But the French government, Renault’s most important shareholder, is sticking to the principle that the car maker’s chairman should lead the alliance, a view shared by other company officials, according to Bloomberg.
The leadership void stems from Mr Ghosn’s outsize role atop the alliance. He engineered the partnership between the French and Japanese companies that has grown to challenge Volkswagen as the world’s biggest vehicle producer. Under governance rules and a broad outline of the way it functions, decisions and recommendations “are always made by consensus between the two shareholders”. This worked when Mr Ghosn headed all three partners, but in the past week he has been removed as chairman of Nissan and Mitsubishi.
Nissan is said to be aiming to make a decision on who will succeed Mr Ghosn as interim chairman by its next board meeting on December 17. The car manufacturer said three external directors will nominate a candidate from remaining board members.
Franco-Brazilian Mr Ghosn was ousted as chairman by the two Japanese partners, even though he has denied wrongdoing, according to broadcaster NHK.
Tokyo prosecutors view that the amount of pay Mr Ghosn would receive was fixed at the time the records were made and therefore he was required to declare this deferred pay in securities reports, Japanese media reported. The executive told the prosecutors that former representative director Greg Kelly told him that the way he reported his remuneration was legal, according to Asahi newspaper.
The turmoil for the alliance comes at a critical time, when all global car makers are wrestling with an array of challenges, from slowing sales in key markets to long-term technological changes requiring massive investments. Analysts say it is essential for the partners to sort out their differences or risk falling behind rivals from Germany to Silicon Valley.
The complex dynamic between Nissan and Renault is further complicated by the removal of Mr Ghosn who, prior to his arrest, had planned to cement the collusion through a full merger of the companies, The National reported on Monday. The move was resisted by Mr Saikawa, who is seeking more power for the Japanese side in the partnership, which he views as too skewed in favour of the French, media reported.
Nissan aims to redress perceived imbalances in the alliance by limiting the power of its French partner to nominate officials to its own board and appoint the chairman of the alliance. The Japanese car maker does not expect shareholding changes to be discussed at the meeting, although there will be talks of who should be the alliance chairman going forward, a source said.
French Finance Minister Bruno Le Maire on Sunday called the alliance “indispensable” and said he wanted to strengthen it while maintaining the existing cross-holdings and governance rules - including one that requires Renault’s chairman to serve in the same role as head of the alliance. Renault’s board stopped short of ousting Mr Ghosn, instead naming deputy Thierry Bollore as interim chief executive.
Renault has a 43 per cent voting stake in Nissan, which in turn owns just 15 per cent of Renault, with no voting rights.
It is clear that tension between the two car makers would render decision-making within the alliance tricky. While the French partner has the power to appoint the chairman, the vice chairman - currently Mr Saikawa - comes from Nissan. Spokesman for both companies declined to comment.
Mitsubishi Motors chief executive Osamu Masuko said on Monday he would follow the meeting in Amsterdam via video conference to discuss its future with the heads of the three companies, adding, “I don’t think one meeting will set everything about the future.”
A Daimler executive may also participate in the meeting. The German car maker has stakes in both Renault and Nissan.
The Franco-Japanese alliance began almost two decades ago, and in 2002 the partners formed Renault-Nissan, an equally-owned company incorporated under Dutch law that is responsible for the joint entity's strategic management. Mitsubishi came on board in 2016.
Updated: November 27, 2018 02:21 PM