Published on May 29th, 2019 | by Jennifer Sensiba0
Nissan Execs May Have Shot Themselves In The Foot
May 29th, 2019 by Jennifer Sensiba
While Nissan’s executives deny it, many in the automotive media and even Carlos Ghosn himself think his arrest was orchestrated by Nissan executives to prevent a merger with Renault. If this is true, then the executives have indeed shot themselves in the foot.
Ghosn, who was the driving force behind the Nissan LEAF, has had a complicated relationship with Nissan.
On the good side, he basically saved Nissan. He first gained his reputation as an executive by turning Michelin around in the 1990s. He then worked for Renault and turned the French automaker back to profitability. When Renault and Nissan started their alliance in 1999, Nissan was in very bad shape. Sales were down, debts were up, and the company was basically bleeding to death. Ghosn became a Japanese hero when he renegotiated contracts, changed the model lineup, and quickly turned the automaker back to profitability.
On the bad side, he did make enemies and left Nissan’s executives feeling insecure. Many of the things he did to save Nissan were not very Japanese. He ran the automaker more like an American or European company, with more authority and power concentrated at the top. He also set up much higher pay for himself than most Japanese executives. All of this created rubs, but the thing that chaffed Nissan’s management the most was the uneven relationship they were in with Renault. Renault owns over 40% of Nissan’s shares, effectively controlling them. Nissan, on the other hand only owns 15% of Renault.
While the companies hadn’t officially merged, the operations were looking more and more like a merger, and Nissan’s executives feared they’d eventually be swallowed up by Renault with no control over the new company or their own.
This is why many people think they set Ghosn up for legal problems, because there was such a strong motive to get rid of him. Add to that Japan’s backward and draconian “Hostage Justice” system (which Maarten covered well here) and accusations of Japanese nationalism and xenophobia, and the case may look positively rotten.
While there’s still no hard proof of such a conspiracy, if there was one, it definitely backfired.
Now that a merger between Renault and Nissan is off the table, FCA is looking at merging with Renault for mutual benefit. Were that to happen, Nissan’s share of the new company would be diluted to only 7% while the new FCA-Renault would still own the biggest chunk of Nissan. If they were looking to get a better position in partnerships with other companies (it’s well known that they wanted that), then recent developments are a blow.
Nissan’s execs may have taken aim at Ghosn only to hit their own feet.