Car veteran, done with Nissan CEO post, seeks to prod France
about Renault's future
By Sean McLain in Tokyo and Eric Sylvers in Milan
It took Carlos Ghosn nearly two decades to turn over the helm of
Nissan Motor Co. to a successor. At 62 years old, he has far less
time to check off a task he has yet to complete: put the French
government in its place.
Mr. Ghosn's decision to step down as Nissan's chief executive
and hand control of the Japanese auto maker over to Hiroto Saikawa
came shortly after Mr. Saikawa was named co-CEO last year. The move
comes as the alliance Mr. Ghosn architected in 1999 with France's
Renault SA faces an inflection point with French elections taking
place in coming months.
Mr. Ghosn continues to oversee the Renault-Nissan partnership,
which expanded last year with the $2.3 billion purchase of control
of Mitsubishi Motors Corp. and is anchored in a cross-shareholding
between the Japanese and French auto makers that keeps various
operations at a distance. Mr. Ghosn prizes this independence,
keeping separate briefcases for Renault and Nissan work.
With the Mitsubishi addition, the alliance's volume nears 10
million vehicles annually -- placing it neck-and-neck with the
three largest auto makers. The $4.5 billion in synergies reported
by Renault-Nissan in 2015 is poised to grow once Mitsubishi is
integrated.
To truly operate like Toyota Motor Corp., Volkswagen AG or
General Motors Co., however, Mr. Ghosn needs to combine his Renault
and Nissan briefcases into one consolidated bag. "The ultimate
target is, at one point, the two groups will merge," Julie Boote, a
Pelham Smithers Associates auto analyst, said.
Mr. Ghosn, speaking in an interview Thursday, said a merger is
off the table as long as French officials see Renault as a national
champion, with interests that are separate from the Japanese
partners. "Nissan has been very clear during discussions with the
French state that they are not going further in terms of a merger,
or anything else, with the French state as a shareholder of
Renault."
A Renault boardroom battle in 2015 was sparked by the former
French Economy Minister Emmanuel Macron's move to increase the
government's stake to 20% from 15%, and it nearly upended the
alliance. The move spooked Nissan investors as it boosted France's
voting rights, and showed the influence Mr. Macron could again flex
in the future if he wins his bid to become France's next
president.
Mr. Ghosn, a product of an elite French education, understands
navigating the political realities requires a delicate hand, but
also knows it puts him at a disadvantage to some of his peers. "We
have a market logic, they have a state logic," he said. "Obviously
it requires a lot of attention."
Renault is profitable, with income rising by a fifth in 2016 to
EUR3.4 billion ($3.6 billion) after a large loss from the previous
year booked on Russian operations was removed and Europe sales
improved. German auto makers, with strong luxury operations in
China and the U.S., dwarf those numbers.
Renault doesn't break out profit by region, but half of its
black ink came from its stake in Nissan, underscoring the
importance of Nissan's strong position in the lucrative U.S.
market. European auto makers struggle to make money in even the
best of times.
Mr. Ghosn appears far from retirement. Asked about leaving his
job, Mr. Ghosn said "not yet." There is only one certainty, that
every year you get older." Renault's bylaws require that he retire
when he turns 65.
Still the executive is known to be a workaholic, logging
hundreds of hours aboard his private jet every month, shuttling
between Paris, Japan and the rest of the world.
He said he now plans to spend more time in Amsterdam, where the
alliance is based. Unlike the Nissan-Renault of two decades ago,
which was competing against weakened European competitors and
Detroit car companies struggling to stay afloat, Nissan, Renault
and Mitsubishi face a tough battlefield.
Among the emerging threats is Peugeot, run by a former
lieutenant of Mr. Ghosn's named Carlos Tavares. Taking the French
rival's reins in 2014 as Peugeot was skidding toward bankruptcy,
Mr. Tavares quickly returned the company to profit and is now
bidding on GM's Opel unit in Germany, which would expand volume by
about 33% or one million vehicles.
GM's move to dump Opel, a money loser since the 1990s,
underscores the Detroit company's renewed focus on growing margins
instead of market share. Armed with some of the industry's biggest
profits and a steady flow of cash, GM CEO Mary Barra is positioning
the Detroit auto giant to outduel Renault-Nissan, Volkswagen and
Toyota in the race to develop autonomous cars.
In addition to confronting French ownership (and French unions
that make cost-cutting tough), Mr. Ghosn says it is time to review
the foundation he has been laying since the Renault-Nissan alliance
was formed.
"We need to make sure the synergies are working and the
opportunities are being acted on and it is benefiting each one of
the companies," he said. "That's why I'm concentrating on the
alliance."
One move Mr. Ghosn is also re-evaluating is the company's
partnership with Daimler AG, the German owner of Mercedes-Benz that
is run by another longtime CEO, Dieter Zetsche.
Daimler and Renault-Nissan have been working on products since
2010 together, including jointly developing city cars and pickup
trucks. Many analysts have speculated Messrs. Zetsche and Ghosn may
someday forge deeper alliances, especially since the companies have
been working hard, executives at the companies say, to overcome the
inevitable mistrust and reluctance that accompanies a cross-border
partnership between companies that are competitors most of the
time.
The friendship has developed cracks. Nissan's Infiniti brand and
Mercedes have been long developing a small luxury car for
production at a shared factory in Mexico, but the sides are
re-evaluating whether that specific project makes financial
sense.
The setback comes as Mr. Ghosn is working to put Infiniti on the
same level as other elite luxury brands, including Toyota's
Lexus.
--John D. Stoll in Detroit contributed to this article.
Write to Sean McLain at sean.mclain@wsj.com and Eric Sylvers at
eric.sylvers@wsj.com
(END) Dow Jones Newswires
February 24, 2017 02:47 ET (07:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.