DAVID FURLONGER: Ghosn but not forgotten

Some years ago, when he was still a motor industry demigod, I was invited to interview Carlos Ghosn in Japan. It was the stuff of nightmares. Nearly 20 hours in the air to reach Tokyo, just enough time on the ground for the meeting, then straight back to the airport for the return to Joburg. Exhaustion doesn’t begin to describe my condition when I arrived home.

In journalistic terms, however, it was worth it. Ghosn, undisputed king and driving force of the international Nissan-Renault alliance created in 1999, didn’t hold back on any topic. When a company PR official who insisted on sitting in tried to moderate one of Ghosn’s answers, he was dismissed from the room. It was a sign of Ghosn’s sense of power that he felt answerable to no-one. He had all the answers.

This arrogance — some might merely call it force of personality — played a huge part in dragging Nissan, which was in deep trouble at the time, into the deal with Renault. The idea was that by combining resources and know-how, they could create an unstoppable giant with shared manufacturing capacity, buying power, design and research — and, best of all, shared costs.

That last word was all-important to Ghosn. He had already earned the nickname Le Cost Killer at Renault and now relished the opportunity to repeat the act on a larger stage. In our interview, he argued that scale was everything. Mergers and alliances were all that stood between many established brands and ruin.

The Renault-Nissan partnership was not one of equals. Renault holds 43% of Nissan, with voting rights, while Nissan has 15%, without rights, of its French partner. Nevertheless, the partnership initially flourished. In almost no time, Nissan went from near-bankruptcy to becoming a global model for profit and margins.

But this was just the start of Ghosn’s ambition. He wanted to bring other big names into the alliance. Fiat, it later emerged, was a target. There was talk of a merger with General Motors. In the event, Mitsubishi, in which Nissan has a controlling 34% stake, was the only addition.

With all this in mind, I wonder how Ghosn, now hiding out in Lebanon, views this week’s announcement of a reshaping of the alliance. Without going into unnecessary detail, Renault will reduce its stake in Nissan to 15%, with the remaining 28.4% going into a trust for eventual sale. Each company will now have a 15% vote in the other. In addition, Nissan will buy up to 15% of Ampere, Renault’s electric car unit. Mitsubishi, separately, may also invest.

New and existing joint ventures will be accelerated. One of potential interest to South Africa is the development of a new half-ton bakkie. Nissan is the only company to build one here, though there is talk of Toyota entering this market segment. The new vehicle will be developed by Renault in Argentina for eventual use by Nissan as well. This has been one of the main benefits of the alliance: building individualised vehicles off the same engineering base or platform. The new alliance plan includes multiple plans for such collaboration, for both electric and traditional petrol/diesel vehicles.

Most importantly, the new agreement is intended to give Renault and Nissan more independence to determine their own operations. Ghosn, when he was chair of both companies, as well as of the alliance, favoured a full merger. Renault CEO Luca de Meo has ruled that out.

Nissan executives have long complained that the unequal shareholding has limited their capacity to act in the best interests of their brand. De Meo says the structure had created a “culture of compromise” that hamstrung both parties. The new deal should simplify matters. US publication Automotive News quotes UK investment analyst Pierre-Olivier Essig as saying: “It’s the first time in many years that Renault and Nissan stop fighting each other. Time will tell what the reshaped alliance brings but for now this is really good news.”

In a message that would be heresy to Ghosn’s ears, De Meo says being big and efficient is not all-important. It is just as important to be flexible and innovative.

Despite his success in rescuing Nissan, Ghosn’s abandonment of traditional Japanese working practices, like guaranteed lifetime employment and promotion based on age and seniority, angered Japanese executives. Nor did it endear him when he changed the company’s official business language from Japanese to English.

So when rumours arose of false accounting at Nissan, and accusations that the Brazilian-Lebanese executive was using company resources for his personal ends, his enemies were ready to pounce and Ghosn was arrested in November 2018 when he returned to Tokyo from a trip to Lebanon.

He denied the charges and the case never went to trial. At the end of 2019, while free on bail, he was smuggled out of Japan in a private aircraft and returned to Lebanon, which has no extradition treaty with Japan. He later accused Nissan executives of plotting against him and claimed he would not get a fair trial under the Japanese judicial system.

Ghosn is still the subject of a Japanese arrest warrant. But while he watches the partial dismantling of the Nissan-Renault alliance he spent 20 years building, he may take comfort from a Bloomberg report this week. It says: “The automaking world has changed since Ghosn was arrested. Nissan, for one, is worth less than half of what it was under him, and the three alliance automakers have lost $28.5bn combined in market value. Nissan posted its biggest loss in 20 years in the fiscal year following the arrest, and it has slipped to become Japan’s third-largest automaker after Toyota and Honda.”

In South Africa, Nissan and Renault operate independently. Nissan South Africa, 100% Japanese-owned, builds bakkies at its vehicle assembly plant in Rosslyn, Tshwane. Renault South Africa imports all its vehicles, though Nissan South Africa has built some in the past. Renault South Africa says the new alliance agreement “is not expected to make any difference locally”. ​