Renault-Nissan alliance will be led jointly in setback for French automaker

November 29, 2018 17:51 CET

AMSTERDAM — The CEOs of Renault, Nissan and Mitsubishi Motors will jointly lead their automaking alliance, splitting a role maintained by Carlos Ghosn for two decades.

The decision foils attempts by Renault to transfer Ghosn’s chairmanship of the alliance board to deputy CEO Thierry Bollore as Nissan seeks to end the French automaker’s control of the partnership with its 43.4 percent ownership of Nissan.

Under its 2002 master agreement, the alliance is chaired by the sitting CEO of Renault, a post still held by Ghosn. Nissan’s reciprocal a 15 percent stake in its French parent currently has no voting rights.

Ghosn, who is in detention in Japan, still holds the alliance titles of chairman and CEO. No changes were made to capital structure or governance, said a person with knowledge of the matter who asked not to be identified.

Who will lead the alliance after Ghosn’s arrest has been a key question. Currently Renault has the right to appoint the chairman and CEO of the alliance, with Nissan picking the vice-chairman. Splitting the leadership defuses that question for now.

The three chiefs are “completely aligned on direction,” Nissan CEO Hiroto Saikawa said following the first meeting of the alliance board since Ghosn was detained over alleged financial improprieties and stripped of his job as chairman of Nissan and Mitsubishi.

“It was an extremely good meeting,” Saikawa told reporters Thursday. “We were able to confirm that the three of us would take the lead, which was excellent.”

The board did not discuss personnel appointments, just operations, Saikawa said.

Speaking separately to reporters, Mitsubishi CEO Osamu Masuko said it was important to restore a sense of normalcy, and that alliance rules weren’t discussed. The gathering lasted less than an hour, he said. The top executives agreed to meet more often, for example on the sidelines of international auto shows, Masuko said.

Senior alliance executives attended the meeting at the alliance’s headquarters in Amsterdam. The meeting was set up prior to Ghosn’s arrest.

Executives were scheduled to discuss alliance operations, such as mobility, regional development, R&D and its Russian business. That led to a somewhat unusual arrangement. Saikawa, Bollore and Masuko all participated via video conference, while reporters staked out the Brutalist HQ building with no access to the proceedings. Photographers snapped photos of attendees through the tinted windows of Renault Talisman sedans as they pulled in.

Nissan Chief Planning Officer Philippe Klein arrives for the meeting in Amsterdam.

Photo credit: REUTERS/Piroschka van de Wouw

The CEOs of the three companies earlier sent a message to employees aimed at dampening fears of divisions between France and Japan, and to minimize the impact of Ghosn’s departure. “The alliance is not national, but global, and requires not a few individuals, but our entire team to deliver,” said the letter, signed by Saikawa, Masuko and Bollore, who was been given Ghosn’s authority at Renault.

Renault has been happy with the status quo, which it dominated under Ghosn thanks to its outsize stake in Nissan, and has been looking to make it permanent. The effort has been championed by its largest shareholder, the French state, stoking tension with Japan.

Nissan pushback

Nissan has been eager to equalize power at the alliance and assert Japanese control over one of the country’s most important companies. That has led to fears on the French side that Ghosn’s arrest may have been orchestrated in what amounts to a coup, a charge Saikawa has denied.

Despite the tensions, analysts have lauded the industrial logic of collaboration. It makes no sense to suddenly part ways, said Takaki Nakanishi, an analyst at Jefferies in Tokyo. “Nissan and Renault worked so hard to create this alliance in the past 20 years. It’s really hard to become zero overnight,” Nakanishi said. “They should sit down to regain trust and confidence and make a rational decision on what’s good for them.

In June, the alliance said it was on track to reach a target of more than 10 billion euros ($11.4 billion) in combined cost savings and incremental revenue through 2022, through joint manufacturing platforms and combining efforts for research and development. The companies said they expected to use common powertrains in 75 percent of the vehicles they produced by that time, up from one-third currently.

Tokyo prosecutors will seek to extend Ghosn’s detention for another 10 days, Kyodo News reported, without saying where it got the information.

Ghosn and alleged co-conspirator Greg Kelly, a fellow Nissan director, were arrested in Tokyo over financial misconduct allegations after a Nissan investigation sparked by a whistleblower. Both deny accusations that they under-reported Ghosn’s compensation, misrepresented Nissan investments and made personal use of company funds.

Bloomberg and Reuters contributed to this report

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