By on December 2, 2019

Nissan’s new chief executive, Makoto Uchida, believes now is the time to reassess its corporate partnership with Renault. In case this is the first automotive-related article you’ve read this year, the Renault-Nissan-Mitsubishi Alliance is sickly. Bizarre financial scandals involving the group’s former chairman Carlos Ghosn (and others), internal power struggles, serious money troubles — the situation is rife with headaches. But Uchida says the only way to cope is to publicly recognize the elephant in the room and see what can be done.

“The alliance is critical to reach our goals,” Uchida said at Nissan’s headquarters in Yokohama on Monday. “We need to look at what worked within the alliance, and what didn’t, and decide how to go forward.”

Nissan is facing a list of problems so long that we couldn’t possibly fit it all into one article. For Uchida, the biggest issues are turning the company’s finances around and adjusting the power balance that currently slants heavily in favor of Renault. The current capital structure in the partnership, leaves the French automaker owning 43 percent of Nissan with voting rights, while Nissan only has a 15 percent stake in Renault and no votes.

This has been a serious issue for Japanese investors, many of which become increasingly vocal over the last few years. According to Bloomberg, Nissan’s share price has fallen 23 percent this year, following a 22-percent decline in 2018. The automaker’s current financial situation is terrible and looking like it might take years to recover. Not much of a bargaining chip, frankly. Profits are at decade lows, with an estimated 12,500 jobs being cut to save money. Nissan also has to contend with heavy investments into electrification and self-driving tech as it dumps more development cash into freshening its fairly dated lineup.

Meanwhile, former alliance chair Carlos Ghosn is awaiting trail in Japan on embezzlement charges. He’s repeatedly denied them, saying they were either above board or drummed up as part of a corporate coup. Even though that could be a fib to help gather sympathy, Renault and Nissan did oust every high-level executive with ties to him this year — including the man whose job Uchida assumed on short notice. The coup seems to have happened, even if Ghosn turns out to be guilty.

“It’s not realistic to expect a miraculous V-shaped recovery, but it is important to show that it can be done,” Bloomberg Intelligence analyst Tatsuo Yoshida explained. “Externally, Uchida needs to normalize the relationship with Renault and restore trust in Nissan. Internally, he needs to address the gulf that’s opened up between employees and management.”

Nissan has already made some governance reforms and is trying to gain some independence from France and make the home team proud. It’s also trying to collaborate more with Renault in a way that keeps everyone happy, necessitating a general secretary to provide regular oversight. But Uchida has a long way to go toward restoring the alliance’s former glory and mutual trust.

 

[Image: FotograFFF/Shutterstock]

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