When Carlos Ghosn arrived in Tokyo in April 1999 to set the parameters for what would become the Nissan Revival Plan, he brought with him a team of 30 senior managers from Renault. Among them: a rising star in the French automaker’s product planning organization and a respected member of its finance team, whose jobs would be to complement Nissan’s Japanese management.
Seven months later, when Ghosn announced his restructuring plan just days before the opening of the 1999 Tokyo Motor Show, there was buzz and excitement.
It felt like a new beginning for Nissan – because it was – as Ghosn set out to reverse seven consecutive years of declining market share and substantially reduce ¥2.1 trillion, nearly $19 billion at the current exchange rate, of automotive debt.
He met and exceeded his targets. Nissan would report record revenues and earnings in fiscal 2004 – and a 10% operating profit margin. Ghosn would be rewarded by being inducted into the Japanese Automotive Hall of Fame.
It is no wonder that 22 years later, with Nissan in the throes of another major restructuring, it does not feel the same. Whether Nissan eventually achieves the targets of its “Nissan Next” plan remains to be seen. But there are several key differences between now and then.
First, there is no Carlos Ghosn to lead the effort. Second, instead of retaining Ghosn as a highly paid consultant, as was the plan by Nissan’s senior management three years before his November 2018 arrest, he is now persona non grata.
More problematic for Nissan is that he has become the automaker’s most vocal critic as he tries to clear his name of criminal wrongdoing. The jury is still out – literally.
Third, changes made to Nissan’s management structure in June 2019, shifting emphasis from cars to good governance, has created a board comprising seven outside directors out of a total of 12, none with auto industry experience, likely making it difficult to replicate the successful first years under Ghosn.
In a second interview with WardsAuto, Ghosn takes aim at what he considers to be a talent drain after his removal from management.
“José Muñoz left for Hyundai and Thierry Bolloré for Jaguar,” he said. “Others left to take prominent positions at other OEMs or suppliers. They left because they didn’t want to get into politics. They just wanted to manage companies.”
Muñoz is global chief operating officer of Hyundai and CEO of Hyundai North America. Bolloré is CEO of Jaguar Land Rover.
Others who left Nissan were Arun Bajaj, head of human resources who followed Muñoz to Hyundai; Vincent Cobée, former head of product development and brand strategy, who left for Groupe PSA (since renamed Stellantis); and Trevor Mann, Nissan’s and Mitsubishi’s purchasing and supply chain chief.
Still others: Joseph Peter, chief financial officer with 35 years of industry experience including 25 years at General Motors, and Jose Valls, president and chairman of Nissan North America, with more than 20 years of experience in Mexico and Latin America.
In total, an estimated 40 people in senior management from Muñoz, a member of the board and executive committee, down to senior managers at Nissan subsidiaries, left the company.
Says Ghosn: “If you rely on 10 or 15 key people working together who had been selected very cautiously, then if half or two-thirds of those people leave, you put the whole system into imbalance. Whatever worked before as a well-oiled machine (gives way to) gridlock.”
Compare that to the seven outside directors who joined Nissan’s board. Included are a retired bureaucrat, a retired banker, a lawyer, a financial services industry executive, an entertainment industry executive, a former energy company executive, a race car driver and two veteran tire industry executives.
The retired bureaucrat and banker, Masakazu Toyoda and Tomoo Nagai, were members of the secret faction who plotted Ghosn’s ouster, according to Ghosn.
Wards has asked Nissan to make both Toyoda, who came from Japan’s Ministry of Economy, Trade & Industry (METI), and Nagai, who heads the company’s influential audit committee, available for interviews and was refused.
Nissan tries to blame Ghosn for its business woes, but Ghosn is having nothing of it. He accuses the seven individuals who conspired to remove him from management with “defrauding” not only Nissan shareholders but also those of Renault and Mitsubishi Motors.
“We have several old boys in management colluding with METI – there is no doubt of that – then giving Tokyo prosecutors the job of putting the plan into action,” he says.
That action culminated with Ghosn’s Nov. 19, 2018, arrest in Japan on charges of falsifying securities reports in under-reporting his compensation and of breach of trust in using Nissan money for personal gain. Subsequent charges of financial wrongdoing followed.
Ghosn proclaimed his innocence and, convinced he could not get a fair trial in Japan, fled the country for his native Lebanon on Dec. 30, 2019. He remains in Lebanon, which has no extradition treaty with Japan.
Ghosn says the losers in the scheming against him are the “French shareholders, which would be Renault, and the shareholders of Nissan and Mitsubishi because everybody lost a lot of money.”
Combined market cap losses of the three Alliance companies through March 2021: $17 billion.
Note that Renault holds a 43% equity stake in Nissan. Nissan holds a 34% stake in Mitsubishi. Renault and Mitsubishi didn’t learn of the plan to remove Ghosn from Nissan management, effectively removing him from Renault and Mitsubishi management as well, until learning about it from media reports.
Can Nissan recover from the damage? It now is a smaller company than it was in 2017 and 2018. Its global market share has fallen. In the U.S., it ranks seventh among brands, having fallen behind Hyundai Kia Automotive Group. And it is no longer among the industry leaders in electric cars.
Ken Courtis, chairman of Starfort Investment Holdings and former top strategist at Deutsche Bank and Goldman Sachs, warns market cap and business losses by the three Alliance partners and six other automakers in the broader alliance are just the “starting point” in assessing damage.
“All have suffered,” he says. “And for all of these companies, trust in Nissan has been shaken to the core as a result of the operation of a self-serving clique acting in secret.”
The Alliance’s fate, like Ghosn’s, is TBD.