Renault-Nissan-Mitsubishi Alliance Chairman Carlos Ghosn is busy trying to convince shareholders of Nissan and Mitsubishi stock that Renault isn’t aiming to take over its Japanese partners. It’s proving to be no easy task.
While Ghosn has been clear of late that a merger isn’t in the works, he’s simultaneously adamant that the relationship between the companies must become “irreversible” before he retires from the industry in 2022.
It appears as if Carlos Ghosn will step down as chief executive of Renault prior to the end of his term. While he’ll likely continue serving as chairman of Renault and CEO and chairman of the Renault-Nissan-Mitsubishi Alliance, he’s planning to lighten his load with the French automaker.
Despite having renewed his contract with Renault, which runs until 2022, the 64-year-old executive previously said he’s wearing too many hats. Ghosn stated at the time that he hoped to scale back his workload before retiring. Apparently, the next step in that process involves ditching his day-to-day duties as a chief executive.
As Renault and Nissan discuss ways to strengthen their bond, Carlos Ghosn is asking everyone to slow their roll on the prospect of a merger. Despite continuously nudging the alliance in that direction, the CEO and chairman is often hesitant to discuss unification as anything more than a hypothetical. So this is par for the course.
“I don’t think you’re going to see it this year or next,” Ghosn said on Wednesday. “Lots of mergers collapse and destroy value — the strength of any company is the ability to motivate people, and how how are you going to do that if some of these people consider themselves second-class citizens.”
The second-class citizens he’s referencing are, presumably, Nissan employees seeking more influence within the Renault-Nissan-Mitsubishi Alliance. A large part of the group’s current strategy is to find ways to give the Japanese automaker more of a say in product development and operations.
Carlos Ghosn, chairman of the Renault-Nissan-Mitsubishi Alliance, has made it clear that his ideal solution for all three automakers is to stop pussyfooting around and enter into a full-on merger. Officially, there’s no deal in the works. “Any discussion about a share transaction involving Renault, Nissan or the French state is pure speculation,” explained alliance spokesman Jonathan Adashek earlier this month.
Unofficially, things are quite different. Renault and Nissan are both committed to maintaining a healthy and strong relationship, but the French government is hesitant to even suggest the possibility of abandoning its stake in Renault. For political reasons, it can’t seem as if the company is being relinquished to Japanese interests vis-à-vis a corporate takeover. Therefore, an accord has to be reached to provide Renault with some level of autonomy — or a lie has to be crafted to make it look that way.
While Ghosn previously denied any possibility of a merger, he began claiming it was a very real possibility this year. Having already developed a structure that would see management of Renault, Nissan, and eventually Mitsubishi Motors overseen by a Dutch foundation based in Amsterdam, the chairman suggested it (or something like it) could also serve as a mediator for their integration as a singular global automotive group. But the French Ministry for the Economy and Finance said that wouldn’t be a possibility. So what’s the solution?
Poor Mitsubishi. Its strange history has ushered in memorable models, an important alliance with Chrysler, success on the World Rally stage, a partnership with Jackie Chan, an epic fuel economy scandal, and building debt that eventually turned it into the sad creature we know today. But there is nothing to say it has to stay mired in that ugly situation. It’s getting ready to crawl out of the dumpster and will be getting plenty of help along the way.
The Renault-Nissan Alliance, which now includes Mitsubishi Motors, announced a reformatting of its executive lineup on Thursday — adding new areas, such as quality and car servicing, where all three companies will work in tandem. Bent on efficiency savings, the Alliance said it will seek to extend its convergence in the areas of purchasing, engineering, manufacturing and supply chains next month (when Mitsubishi also gets its new CEO for North America). The ultimate goal here is to maximize profits that can then used for advanced research and development.
Where does this leave Mitsubishi? In a much better position than it once was. Despite initial concerns that Renault and Nissan would attempt to relegate the brand to Asia, where it’s strongest, the Alliance opted to improve the company’s U.S. dealership network and grow sales by 30 percent to 130,000 units per year.
Carlos Ghosn is pledging to solidify the alliance between Renault, Nissan, and Mitsubishi Motors after agreeing to stay on as the French automaker’s chairman and CEO for the next four years. He also announced the companies will take the next few weeks to develop a plan to “make the alliance irreversible.”
While we’d love to hear about an automotive blood pact or — better still — a strategy to clone Ghosn for the next hundred years, the final plan will probably be a little more mundane. But, according to the chairman’s Friday announcement, it will not include a merger — at least not until the French government gets out of the way.
Despite Volkswagen delivering an impressive 10.74 million vehicles in 2017, Nissan-Renault Alliance head Carlos Ghosn says his automotive group was actually the top sales dog. VW managed a 4.3-percent increase over last year’s volume and set a new record for itself, but Ghosn argues that doesn’t matter if it’s counting heavy truck sales in its total sum.
“The [Renault-Nissan] alliance, with more than 10.6 million light private and commercial vehicles sold in 2017, is the premier global automobile group,” the CEO told a parliamentary committee hearing in Paris.
The alliance consisting of Nissan, Renault, and Mitsubishi Motors is currently searching for partners for a plunge into the robo-taxi business. While chairman Carlos Ghosn claims mobility will never replace traditional ownership, he acknowledges the need to explore other avenues to remain competitive.
“A lot of people think this is substitution. It’s not — it’s addition,” Ghosn said in November. “The traditional business of building cars and selling cars and owning cars is going to continue.”
However, the supplemental businesses aren’t going off half-cocked. Ogi Redzic, Alliance senior vice president, has said he’s personally overseeing about 1,000 employees tasked with developing connectivity services for the automotive group and intends to announce the partners for the new autonomous cab service in the coming months.
Nissan Motor Company is moving senior vice president and chairman of Renault Eurasia, Denis Le Vot, westward to succeed Jose Munoz as president and chairman of Nissan North America. While Munoz will persist as the brand’s global chief performance officer, Le Vot will take over his regional duties.
A french native, Le Vot joined Renault in 1990 and soon moved up the ranks — eventually being appointed to the brand’s management committee in 2015 and AvtoVAZ’s board of directors the following year. The Nissan executive board in Yokohama, Japan, approved his new appointment in a meeting on Tuesday. However, the title doesn’t become official until January 16th.
Carlos Ghosn, CEO of the Nissan-Renault-Mitsubishi Alliance, says automakers are going to have to get comfortable with suppliers doing more of the work as the industry evolves. With in-car technologies progressing more rapidly than ever before, the alliance head says engineers will have to lean on parts providers to take the burden off its own engineers.
Ghosn even said he had recently spoken to supplier who accused him of not listening. “They said we are duplicating
“They said, ‘We are developing the same things, and at the end of the day, you’re going to order parts from me, and you’re going to pay twice — for your own development and for mine. So why don’t we start from the beginning to work together?’ That’s an important point,” he said. “We are now probably one of the largest buyers in the world.”
The automotive collective intends to sell more than 14 million vehicles annually by the end of 2022, which represents an increase of about 3.5 million units from the expected volume for 2017. The strategy includes more shared platforms and powertrains between brands, a dozen EV models, and a fleet of autonomous taxis.
Earlier this year, the big bosses at Nissan expressed their desire to grab a full 5 percent of pickup truck market share in the United States. However, chasing arbitrary targets has now fallen in favor of smart growth.
Still, lighting a fire under the brand seems to have worked, with Nissan moving nearly 1.5 million units in 2016, almost a million more annual sales than 15 years ago. With those numbers in mind, the company is acknowledging it’ll soon need a new assembly plant in America.
On Friday, Nissan Motor Co. blamed a shortage of key staff for improper final inspection procedures at Japanese assembly plants. The problem, which amounts to little more than not having having a specially certified technician give each vehicle a final once-over, has forced the automaker to recall 1.2 million vehicles within Japan this year. As the mandate applies only to vehicles sold on the nation’s domestic market, no exports to North America are affected.
However, that hasn’t stopped Japan’s government from coming down hard on the company for its bureaucratic misstep. After discovering that uncertified inspectors were signing off on vehicle checks required by the transport ministry, Nissan has been incredibly apologetic. It even launched a full-scale investigation, finding that “nonconforming final inspections” were commonplace by the 1990s at the plants, and could even have existed at one factory since 1979.
Everyone in the automotive industry is talking about a grand shift toward mobility, resulting in a future where nobody owns cars and we all putt around in autonomous pods. Well, almost everyone. Carlos Ghosn, who currently chairs the alliance between Nissan, Renault, and Mitsubishi, thinks that’s a crock.
While there’s plenty of executives keeping quiet on the evolution of ownership, few have come forward suggest business as usual will be the new status quo. Meanwhile, swaths of industry experts are pushing the notion that rental services, ride-sharing, and firms like Uber or Lyft will eventually replace the need for dealerships and garages.
A couple of years ago, the French government increased its stake in Renault to 19.73 percent, boosting its influence and secure double voting rights for longer-term investors – itself included – in an alleged attempt to block a resolution that could’ve reduced its control over the company.
At the time, many viewed it as a challenge aimed squarely at Chief Executive Carlos Ghosn and decried the use of the company as a political football. Today, the French government sold 14 million Renault shares, cutting its stake back to 15 percent.
Since acquiring Mitsubishi in 2016, the Renault-Nissan Alliance has found itself in the midst of Volkswagen and Toyota’s struggle for the title of World’s Largest Automaker.
At the end of 2016, VW was still on top but momentarily ceded ground as Toyota amped up volume in early 2017. Compared to last year, the Germans saw sales fall a half-percent in the first quarter of 2017 as the Japanese companies recorded more stable growth. But CEO extraordinaire Carlos Ghosn believes Renault-Nissan has what it takes to fill the top spot before the end of the summer.
While it would be a privilege to tell you that Ghosn entered a darkened room illuminated by a single spotlight to announce the time for the Alliance to crush its enemies was now, the reality was far more tame. The shareholders meeting was adequately lit and Carlos stated, without malice, that becoming the world’s largest automotive superpower is more of an inevitable accident than an intentional conquest.