Nissan seeks less influence from Renault as Japan aims to stabilize alliance

November 21, 2018 12:23 CET

TOKYO — Japan said it is ready to work for the stability of the Nissan-Renault global alliance following the arrest of Chairman Carlos Ghosn, but a Nissan executive said the Japanese automaker is seeking ways to weaken the influence of its French partner.

The 19-year alliance, enlarged in 2016 to include Japan’s Mitsubishi Motors, has been shaken by Monday’s arrest of Ghosn for alleged financial misconduct. Ghosn has personally shaped the alliance and had pledged to consolidate it with a deeper tie-up.

“We need to return to the original idea of a win-win relationship,” a long-time Nissan executive told reporters, speaking on condition of anonymity. It should be “a more equal relationship than before.”

A reduction of Renault’s stake in Nissan – which recovered from near-bankruptcy after Ghosn took its helm and has become more profitable than its French partner – should be one option under consideration, the Nissan executive said. The French automaker currently owns 43.4 percent of Nissan, which in turn holds a non-voting 15 percent stake in Renault and 34 percent of Mitsubishi Motors.

One of the world’s best-known auto industry executives, Ghosn had a strong influence on the alliance, serving also as CEO of Renault and chairman of Mitsubishi Motors, although his efforts to drive integration were hampered by the French government’s 15 percent stake in Renault.

On Monday Nissan CEO Hiroto Saikawa portrayed Nissan as a victim of Ghosn’s alleged misdeeds. But Nissan itself faces scrutiny over the financial misconduct case, with the Asahi newspaper reporting on Wednesday prosecutors are weighing bringing a case against the Japanese automaker.

With Ghosn potentially gone from the picture, the future shape of the alliance is the subject of intense investor speculation.

Mitsubishi Motors CEO Osamu Masuko said on Tuesday it may be hard to manage without the unifying figure of Ghosn. The success of the alliance, which helps the automakers develop products and control costs, is critical for the members at a time when the industry is buffeted by major changes in consumer tastes and rivals are investing billions in new growth areas like automated and internet-connected vehicles.

Given those considerations, the Japanese and French governments have backed the alliance and called for its stability in the aftermath of Ghosn’s arrest. Japan said on Wednesday it was ready to support the alliance. It “is a symbol of Franco-Japanese industrial success,” the top government spokesman said, calling for a “stable relationship” between the three automakers.

Whistleblower

Nissan said on Monday an internal investigation triggered by a tip-off from a whistleblower had revealed that Ghosn engaged in wrongdoing including personal use of company money and under-reporting for years how much he was earning. It plans to try and remove him from the post on Thursday.

Ghosn, 64, was arrested by Japanese prosecutors who said he and Representative Director Greg Kelly conspired to understate Ghosn’s compensation at Nissan over five years starting in fiscal 2010 as being about half of the actual 10 billion yen ($88.65 million). Ghosn and Kelly, who has also been arrested, have not commented on the accusations so far and Reuters has not been able to reach them.

Kyodo News reported on Wednesday that the Tokyo District Court has decided that Ghosn and Kelly will be detained for a further 10 days.

Japan’s Nikkei business daily reported on Tuesday that Ghosn had received share price-linked compensation of about 4 billion yen over a five-year period to March 2015 but that it went unreported in Nissan’s financial statements. Prosecutors also plan to interview Saikawa on a voluntary basis, NHK reported on Wednesday citing unnamed sources. Prosecutors were not immediately able to comment. A Nissan spokesman declined to comment.

Renault on Tuesday tapped its chief operating officer and a senior board member to fill in for Ghosn, but the board refrained from firing him while waiting for details on the allegations – a decision that could buy more time for an accelerated, permanent succession process.

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