Ghosn is gone — What will happen to the Nissan-Renault-Mitsubishi Alliance?

By Christopher A. Sawyer
The Virtual Driver

(November 23, 2018) The shocking announcement that Carlos Ghosn was arrested and "perp walked" off the corporate plane at Narita Airport outside Tokyo took the industry by surprise, and has led to non-stop speculation concerning the validity and depth of the charges, the identity of the whistleblower, and what will happen to the Nissan-Renault-Mitsubishi Alliance.

Hated by the Macron administration in France, Ghosn was the target of the bureaucratic class in that country for his high visibility and similarly high salary. This was not helped by the fact that Renault is at least partially owned by the French government, which has a rather paternalistic view of the automaker.

Nissan hated the fact that Renault owned a larger share of Nissan than it owned of Renault, had more control over its direction and finances, and there was no pathway by which a Japanese executive could rise to the top. And Mitsubishi — a company that had fallen hard and far from its late 1980s/early 1990s high — was just glad to be tied to a structure that would provide much needed new platforms and powertrains, access to capital, and a respite from the cronyism and corruption of the past two decades that nearly destroyed the brand.

Whether Ghosn underreported income, used company funds to buy homes around the world, or did other things of a sketchy nature is not the real story, however. Since the dawn of the Nissan-Renault Alliance the unanswered question has been: “What is the plan of succession?”

There has never been a logical explanation of who would replace Ghosn, and how the tie-up would continue to evolve to meet new market challenges. Instead, we have been asked to believe that Mr. Ghosn (never “Carlos” if you knew what was good for you) had everything under control. He ran each company, oversaw each major decision, and explained the inner workings of the partnership with just enough fairy dust and bullshit to make you think it was all possible.

This permeated the alliance, especially on the French side the ledger; a fact made abundantly clear during a lunch I had with a top alliance lieutenant years ago, His explanation of his the partnership worked was heartfelt, but filled with enough talk of “mutual respect” and “the common good” to make you feel you were at a Bernie Sanders rally.

What was missing was detail. I had many questions: How was capital allocated between the companies? Which partner took the lead in product decision? Was there a single product planning function? How were common goals set? Would the partnership eventually evolve to a common set of components and systems? Could Renault “borrow” a Nissan vehicle or Nissan a Renault to fill a gap without having to create a brand-specific version built in that brand’s plant? Did the negotiation process mean there would be a family of global chassis “skinned and trimmed” for their brands and markets? Would the engineering groups agree to this, and then work to establish a “24 hour” engineering process that passed projects from Nissan to Renault and back again at the end of each group’s workday?

For these and other questions there wasn’t much detail, just a lot of talk about the “value of the partnership” and the need for “common goals” when it would have been much more helpful to talk about common processes and reporting structures.

Nevertheless, it seemed to work. Mr. Ghosn jet setted across the world, rubbed shoulders with the high and mighty, was a regular guest at the Clinton Global Initiative and Davos economic summits, and was the darling of business schools everywhere. He was even Bill Ford Jr.’s first choice to take control of Ford’s future when the Dearborn automaker hit the skids in the early 2000s.

Fortunately for him, my sources insist, the George W. Bush administration took a dim view of an automaker with a sizable government ownership stake (Renault) taking control of a major American production asset. This was the main reason Alan Mulally ended up on the 14th floor of Ford’s HQ, and why talk of anything more than an alliance with VW is just that — talk.

Unfortunately for all involved, what happens to the Nissan-Renault-Mitsubishi Alliance is anyone’s guess. In the short term there are product and business plans to execute, and the ships of state will continue to sail forward as they execute to the plan. However, without the glue that held this all together — or, perhaps, the juggler who kept all of the balls in the air — no longer in charge, the inevitable in-house fighting and recriminations will commence.

If they want to survive, these automakers had better put aside their differences and start rowing together, or prepare for the inevitable unraveling.