Ghosn’s arrest casts doubt on future of Renault-Nissan alliance

Carlos Ghosn was arrested in Japan Monday for allegedly abusing company funds and misreporting his income. (AP)
Updated 20 November 2018
0

Ghosn’s arrest casts doubt on future of Renault-Nissan alliance

  • Carlos Ghosn been ‘the glue that holds Renault and Nissan together,’ Bernstein analyst Max Warburton wrote in a note to investors
  • With Ghosn out at Nissan and probably Renault as well, the companies are unlikely to get any closer

DETROIT: For years, France’s Renault and Japan’s Nissan struggled to make money in the global auto business.
Then came Carlos Ghosn, a Renault executive who helped to orchestrate an unprecedented transcontinental alliance, combining parts of both companies to share engineering and technology costs.
Now Ghosn’s arrest in Japan for alleged financial improprieties at Nissan could put the nearly 20-year-old alliance in jeopardy.
Ghosn, 64, born in Brazil, schooled in France and of Lebanese heritage, is set to be ousted later this week from his spot as Nissan chairman. He also could also lose his roles as CEO and chairman of Renault, threatening the alliance formed in 1999 that’s now selling more than 10 million automobiles a year.
He’s been “the glue that holds Renault and Nissan together,” Bernstein analyst Max Warburton wrote in a note to investors. “It is hard not to conclude that there may be a gulf opening up between Renault and Nissan.”
Nissan has said it will dismiss the Ghosn after he was arrested in Japan Monday for allegedly abusing company funds and misreporting his income. That opens up a leadership void at the entire alliance, for which Ghosn officially still serves as CEO and chairman.
Ghosn added Mitsubishi to the alliance two years ago after the tiny automaker was caught in a gas-mileage cheating scandal. He had even floated the idea of a full merger between the three companies.
“Today’s events throw any prospect of that up in the air,” Michael Hewson, chief market analyst at CMC Markets in London, wrote in a note to investors.
Nissan CEO Hiroto Saikawa has publicly resisted the idea of an outright merger. So, with Ghosn out at Nissan and probably Renault as well, the companies are unlikely to get any closer.
The companies now share technology, and they save money by jointly purchasing components.
While there could be some scrutiny of the relationships between the companies, they’re so intertwined now that cutting them apart would be difficult, said Kelley Blue Book analyst Michelle Krebs. “I would not predict its demise,” Krebs said of the alliance.
She said she sees further consolidation in an industry that faces unprecedented research costs for autonomous and electric vehicles, while at the same time continuing to develop cars and trucks powered by internal combustion engines.
“The last thing one of the world’s biggest automakers needs is the disruption caused by an investigation into the behavior of a man who has towered over the global auto sector,” said Michael Hewson, chief market analyst at CMC Markets in London.
Nissan’s board is to meet Thursday to consider Ghosn’s fate. Renault, where Ghosn is also CEO, said its board will hold an emergency meeting soon, and experts say it is unlikely that he will be able to stay at the company or the broader alliance.
The brash Ghosn was once viewed as a savior in the auto business with the ability to turn around the two struggling companies. In 2006 he even proposed an alliance with global giant General Motors.
Bernstein’s Warburton wrote that Ghosn’s once-mighty reputation has been declining for years, while Krebs said Nissan never could meet Ghosn’s goal of 10 percent US market share even though it has relied on “bad behavior” such as heavy discounts and sales to rental car companies.
Saikawa reiterated Nissan’s commitment to the venture, while a Renault statement expressed “dedication to the defense of Renault’s interest in the alliance.”


Former Nissan chairman Ghosn appears in Tokyo court

Updated 23 May 2019
0

Former Nissan chairman Ghosn appears in Tokyo court

  • It is the first of a series of hearings to iron out logistics for Carlos Ghosn’s actual trial
  • Nissan’s former chairman has hired a strong legal team as he fights to clear his name

TOKYO: Nissan’s former chairman, Carlos Ghosn, appeared in a Japanese courtroom Thursday for a hearing ahead of his trial on accusations of financial misconduct.
It was the first of a series of hearings to iron out logistics for Ghosn’s actual trial. The trial date has not been set, and experts say it could be months away.
Ghosn, who led the Japanese automaker for two decades, was arrested in November and charged with underreporting his income and breach of trust. He was released on bail in March, rearrested in April on fresh accusations and then released again on bail on April 25.
Ghosn insists he is innocent and says he was targeted in a “conspiracy” by others at Nissan Motor Co.
Nissan, which is allied with Renault of France, has seen profits nose-dive amid the fallout from Ghosn’s arrest.
Ghosn has hired a strong legal team as he fights to clear his name. One of his top lawyers, Junichiro Hironaka, was seen walking into the courtroom Thursday with Ghosn.
One of the conditions of Ghosn’s release on bail is that he is forbidden to contact his wife. Prosecutors say that’s to prevent evidence tampering.
Ghosn’s lawyers challenged that restriction, saying it is a violation of human rights, but the Supreme Court rejected their appeal Tuesday.
The lawyers can appeal again to have the restriction removed.
In a briefing Thursday, Deputy Chief Prosecutor Shin Kukimoto welcomed the Supreme Court’s decision.
“For married people to be together is important, but I feel there was enough reason for the Supreme Court to support us in this restriction,” he said.
Kukimoto declined comment on the hearing, which was closed to reporters and the public.
Kukimoto also said the maximum penalty upon conviction of all 15 counts of the charges Ghosn is facing is 15 years in prison and a fine of ¥150 million ($1.4 million).