Renault-Nissan Alliance Quietly Scales Back Joint Functions

Without the glue that was Carlos Ghosn holding the Renault-Nissan Alliance together, some of the partnership’s joint-business operations are reportedly being disbanded as corporate relations continue to sour. Nissan quietly started dissolving the Office of the CEO in April, after a special corporate governance committee claimed it was one of the reasons why it was so difficult to detect Ghosn’s alleged financial misconduct.

The Japanese automaker has since sought to rejigger its own management structure, as per the committee’s suggestions, however Renault intends on blocking those governance changes. Now the Financial Times is reporting that the two companies are gradually unwinding departments providing oversight for collaborative efforts related to light commercial vehicles, sales and marketing, communications and more.

In 2018, Ghosn made a laundry list of appointments from both companies to support alliance-level functions — sometimes creating entirely new departments. Many executives were redeployed to oversee operations between the two firms, ranging from manufacturing projects to after-sales services. Other divisions, like purchasing, were already merged. But unnamed insiders have reported numerous departments are dismissing their staff while others are simply sitting idle with people having “nothing to do.”

From FT:

The idea was to set the businesses on a course of ever-greater integration, with the aim of achieving €10bn of joint synergies by 2022, and thus making the alliance “irreversible.”

Since Mr. Ghosn’s arrest on charges that he denies, France and Japan have drifted further apart, in part because of an increasingly strained relationship between the two rival management teams.

“It is fair to say the relationship is as bad as we have seen in 20 years, and that is having an impact on joint operations,” said a second person close to the situation.

While these decisions are primarily about Nissan and Renault gaining distance from the Ghosn era, nullifying agencies used to help the alliance collaborate makes it appear as though they’re also trying to achieve space from each other. As things currently stand, neither manufacturer has done much to assuage fears that their differences have become irreconcilable.

The only noteworthy exception is Nissan’s latest proposal to establish a new “strategy committee” with seats reserved for Renault’s chairman and CEO. Meanwhile, French President Emmanuel Macron is scheduling time to discuss the dire state of the automotive alliance with Japanese Prime Minister Shinzo Abe next week.

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