Carlos Ghosn's Merger Mania

Andrew Dederer
by Andrew Dederer
carlos ghosns merger mania

As sure as night follows day, you can count on seeing the following after news of an automaker in trouble. “___ is in talks with Renault/Nissan CEO Carlos Ghosn.” The other thing you can count on: these talks won’t amount to a hill of beans. At most, the result will be some sort of technology-sharing venture in some peripheral market or an engine deal for a car you’ve never heard of. Why all this sound and spin signifying nothing? Because the Brazilian-born auto exec knows which side of his bread is buttered.

The biggest problem facing Renault Nissan (R/N) isn’t failure; it’s their lack of “success.” R/N’s operations are profitable, their factories efficient, their cars respected. All this is true, but… while both companies’ model lineups contain plenty of fine cars, there are no “segment-busters.” Worse, these R/N machines aren’t languishing in second place; they’re forgotten cars.

Nissan’s USA ops are a classic example. The Altima and Sentra are not even mentioned in the same breath as Accord/Civic or Camry/Corolla, sporty performance or not. The Quest is buried deep in the minivan heap. Nissan’s crossovers are a mishmash: two-row vehicles in two sizes (and price points) with no true three-row offering.

Nissan’s American SUVs tell the same tale: competent enough, but lost in the shuffle. The recent meltdown/price war in pickups hit Nissan even harder than the beleaguered Chrysler Corporation. The Titan’s profits evaporated. Toyota, the new new kid on the block, managed to shift four times as many Tundras as Titans.

And that’s where it hurts. If you were to boil Nissan’s corporate motto down to two words, they would be “beat Toyota.”

If you were allowed a caveat it would be “especially in Japan.” Historically, chasing down Toyota on its home turf has been the doom of ambitious Japanese makers. Mazda is no longer an independent automaker (part assimilated by Ford) because they tried to fight Toyota in Japan; Suzuki’s making a push right now (film at 11). Fighting Toyota in every niche (and keeping enough capacity to match them) almost killed Nissan ten years ago.

Ghosn is still hailed as a savior and great business leader in Japan for pulling Nissan’s fat from the fire. But it’s important to note that most of Ghosn’s miraculous “fixes” were nothing more than cutting Nissan down to its actual size, jettisoning their unrealized ambitions. And just because Ghosn made Nissan see sense– in the short term– doesn’t mean that Nissan’s old guard have to like it. To trail Toyota can be borne. To trail Honda (the Taro-come-lately of the Japanese makers) is unacceptable.

This is the rub at Renault/Nissan: while they’re holding their own in terms of profits and market share, their natural rivals– both above and below– ARE gaining ground.

With organic growth stuck resolutely in neutral, Ghosn understands that there’s only one other path capable of placating his Japanese taskmasters: adding another “partner” to the firm. After all, it worked before. Hence the abortive merger talks with GM— which ultimately served to consolidate both GM CEO Rick Wagoner and Ghosn in their respective executive suites. Hence murmurs of a Chrysler conglomeration.

Without delving too deeply into Ghosn’s Machiavellian machinations, it’s highly doubtful that the Brazilian-born auto exec is doing anything more than a head fake when he speaks of cooperation. Ghosn is smart enough to realize that trying to recapture the “magic” of the Renault/Nissan merger would put the company on a hiding to nowhere. After all and again, it wasn’t THAT successful.

IF the Nissan – Renault merger would have been wildly profitable, leading to a true Toyota-rivaling corporate colossus, Ghosn would now be untouchable. If the R/N merger had been an abject failure, he would have been axed. Stuck in the middle, Ghosn keeps the acquisition pot boiling. Removing him would kill the [theoretical] deal that would deliver the last bit of wanted size.

And if such a merger should happen, Ghosn's the only logical person to handle the change-over. Clearly, demonstrable, he's the consummate integrator. Other auto execs are sharper with numbers (though Ghosn's no slouch with financials). Others have closer ties to product (though Ghosn is quite the car-nut). But it’s doubtful any other auto exec could have held two such disparate automotive companies together while keeping them out of each other's hair. This is, was and will be Carlos Ghosn's genius.

As long as Nissan and Renault’s owners dream of expansion, Ghosn’s position is safe. The moment Nissan or Renault believe that Ghosn can’t fulfill their long-term aspirations, they will begin the process of finding someone who can. It is therefore in Ghosn’s best interest to fuel rumors of mergers that are not in the best interest of Renault Nissan or its [supposed] dance partners.

Join the conversation
2 of 19 comments
  • Robert Schwartz Robert Schwartz on Mar 26, 2008

    Reb: Andrew, was transliterating xxxxxx as meshugas because I made a comment a three weeks ago in another thread: “Misegos” should be meshugas.

    The root word meshuge (meaning crazy, insane; משוגע if you have the correct font, mem shin vav gimel aiyn if you don’t) is originally Hebrew, but was used in Yiddish. Yiddish is a German dialect, originally spoken by the Ashkenazi Jews (Ashkenazi is a Hebrew word that means German), which was written with the Hebrew alphabet. There is no official system for transliterating Yiddish into Latin Alphabet for English speakers. The most common transliteration of the root word is meshuge, although meshugge is not uncommon. The word is not pronounced mes’huge; the sh is a digraph as in shoe or ship, the g is hard, as in gas or grim. Meshugas (craziness, insanity; משוגעת, if you have the correct font or mem shin vav gimel aiyn tav if you don’t) is often transliterated mishegas or -goss or -gaas, but the second consonant is always a shin not a sin, so it must be sh. I think the second vowel often morphs into an e because the syllable looses stress when the extra consonant is added at the end, but it should be u. the last vowel is variable, but I would prefer an a to an o. Now this a matter of transliteration, and as I noted, there is no official system for transliterating Yiddish into Latin letters for English speakers. That said, I am not fond of your transliteration using single quote marks where the Hebrew alphabet often leaves vowels implied or indicated in subscript. The first mark is especially difficult for monolingual English speakers, who are not an inconsiderable number of readers of this site. It leaves the initial consonant high and dry without a vowel sound to hang onto and most english speakers would not be able to pronounce it. The second mark is more puzzling. The Yiddish word has a vav which represents a vowel sound which would be rendered with an "o" or a "u" in English. It is not a implied or subscripted vowel. The argument for using an "e" to represent the vav is that the vowel is de-stressed and is pronounced by Anglophones as a schwa. I prefer the u because it relates more directly to the vav, which is its orthographic ancestor. That brings to the third mark. I think what you intended for the third mark was to render the ayin as an unvoiced stop. I really haven't heard it from Yiddish speakers (sadly all gone from my life due to their great age), and Anglophones are very unlikely to be able to render it. Using a double aa in some transliterations is intended to produce an open back unrounded vowel "a" as in father rather than an open front unrounded vowel "a" as in pat. I note that the word now is found in English dictionaries. None of the renderings there use a single quotation mark. The American Heritage Dictionary entry uses three transliterations: meshugaas or mishegaas or mishegoss.

  • Pch101 Pch101 on Mar 27, 2008

    Get ready for the TTAC spinoff website -- The Truth About Hebrew, featuring weekly dispatches under the column heading of Apostrophe Death Watch.

  • Denis Jeep have other cars?!?
  • Darren Mertz In 2000, after reading the glowing reviews from c/d in 1998, I decided that was the car for me (yep, it took me 2 years to make up my mind). I found a 1999 with 24k on the clock at a local Volvo dealership. I think the salesman was more impressed with it than I was. It was everything I had hoped for. Comfortable, stylish, roomy, refined, efficient, flexible, ... I can't think of more superlatives right now but there are likely more. I had that car until just last year at this time. A red light runner t-boned me and my partner who was in the passenger seat. The cops estimate the other driver hit us at about 50 mph - on a city street. My partner wasn't visibly injured (when the seat air bag went off it shoved him out of the way of the intruding car) but his hip was rather tweaked. My car, though, was gone. I cried like a baby when they towed it away. I ruminated for months trying to decide how to replace it. Luckily, we had my 1998 SAAB 9000 as a spare car to use. I decided early on that there would be no new car considered. I loathe touch screens. I'm also not a fan of climate control. Months went by. I decided to keep looking for another B5 Passat. As the author wrote, the B5.5 just looked 'over done'. October this past year I found my Cinderella slipper - an early 2001. Same silver color. Same black leather interior. Same 1.8T engine. Same 5 speed manual transmission. I was happier than a pig in sh!t. But a little sad also. I had replaced my baby. But life goes on. I drive it every day to work which takes me over some rather twisty freeway ramps. I love the light snarel as I charge up some steep hills on my way home. So, I'm a dyed-in-the-wool Passat guy.
  • Paul Mezhir As awful as the styling was on these cars, they were beautifully assembled and extremely well finished for the day. The doors closed solidly, the ride was extremely quiet and the absence of squeaks and rattles was commendable. As for styling? Everything's beautiful in it's own way.....except for the VI's proportions were just odd: the passenger compartment and wheelbase seemed to be way too short, especially compared to the VI sedan. Even the short-lived Town Coupe had much better proportions. None of the fox-body Lincolns could compare to the beautiful proportions of the Mark was the epitome of long, low, sleek and elegant. The proportions were just about perfect from every angle.
  • ToolGuy Silhouetting yourself on a ridge like that is an excellent way to get yourself shot ( Skylining)."Don't you know there's a special military operation on?"
  • ToolGuy When Farley says “like the Millennium Falcon” he means "fully updatable" and "constantly improving" -- it's right there in the Car and Driver article (and makes perfect sense).