Carlos Ghosn Claims He Never Wanted a Nissan-Renault Merger in the First Place
“Frankly, if I was forced to make a merger, I would have resigned,” said Ghosn. “That would’ve been better for me, in a way.”
When Carlos Ghosn, aka "Le Cost Killer," left his job at French tire manufacturer Michelin, he did so with a reputation of being able to turn around a company in its bleakest hour. His newest employer, Nissan, hoped that notoriety would hold true when offering Ghosn a position at the executive table in 1996. History would show that Ghosn proved to pull the spiraling automaker out of a tailspin, but not without the turmoil that would ultimately result in his own arrest in 2018 and subsequent Hollywood-style escape.
During a recent interview with The Drive's Editor-in-Chief Kyle Cheromcha, Ghosn talked about his legacy at Nissan and shared details of a potential merger with Renault that may have ultimately led to his arrest. But according to the fugitive Ghosn, this potential merger was something that he never wanted in the first place.
In 2016, Ghosn began preparing to hand over Nissan's keys to his protege Hiroto Saikawa the following year. He would no longer be the CEO of the company by February 2017, but he was still the chairman of Nissan and Mitsibushi's board of directors, as well as the chairman and CEO of Renault. Now is an important time to remind everyone that not all CEOs are in the limelight like Elon Musk. Ghosn may have had a hardball corporate reputation, but his picture stayed out of the news...until his famous arrest on November 19, 2018.
News then began to leak about the chairman's final intentions for Nissan, which reportedly involved a Ghosn-backed plan to irreversibly merge the Nissan and Renault brands. Despite the two automakers being in a rather profitable automotive ménage à trois with Mitsubishi, the brands were simply involved in an alliance, not merged together as a single company. Ghosn told The Drive that not only was the potential Nissan-Renault merger not his idea but that it came at the direction of the French government.
"[T]he French state asked me, on top of continuing the strategy that worked so much for Renault, to make the alliance irreversible," Ghosn said. "They knew that I was against the merger. I told them, 'If you want to do a merger, it’s gonna be without me.'"
In June 2018, the French government approached Ghosn with the mandate of a merger. Ghosn said that French government insisted he was involved with the merger, so he reluctantly agreed to put something on paper of what a potential merger could look like—because he knew that the French already had Nissan backed into a corner.
In 2014, France passed the Florange Law to give tenured shareholders more voting power when it comes to a publicly-traded company, so as long as said company doesn't explicitly prohibit double voting rights. Ghosn, who was the CEO of both Renault and Nissan as this took place, publicly objected to the passage of the law, as it would potentially destabilize the alliance with Nissan by giving the French government a significant amount of voting power in company matters. France continued to gobble up shares of Renault ahead of the law's enactment in 2016.
"My idea was to create a holding company based in Holland with one share that would be common to Nissan and Renault and Mitsubishi, that would be traded both in Tokyo and in Paris, and probably in Holland, with one board for the entities," Ghosn said. "There would be three executive committees, one for Nissan, one for Renault, one for Mitsubishi. There would be three headquarters. But in a certain way, we would create one entity that would group the common functions of the alliance that would be based in Amsterdam with one board, one share, and this would make it irreversible."
Ghosn also said he did his best to ensure that each company could still retail its own self-rule. "We would respect the autonomy of each company, and we respect the nationality and the culture of each company because the headquarters of Renault would remain in France, Nissan in Yokohama, Mitsubishi in Tokyo."
Ghosn claims that he was still adamantly opposed to the merger. However, given his reach into Nissan, the sudden abrupt pivot from opposing to drafting the potential merger structure was seen as a threat to the Japanese company. Ghosn even theorized that if he had announced a definite merger his arrest would have taken place "much sooner."
"[S]ome people said, 'If we let him continue we’re gonna end up merging with Renault and having the French state having a say in a company which is essentially a Japanese company.' And they didn’t want that to happen," said Ghosn. "The only way to stop that, in their opinion, is to get rid of me. Because they knew that I would be the only person capable of carrying this convergence between the companies because I was legitimate on all sides. I was legitimate at Mitsubishi, I was legitimate at Nissan, and I was legitimate over at Renault."
His belief that the alliance could be destabilized was proven right and punches were rolling in from both sides. Ghosn's arrest would be the pulling of the merger's linchpin. Despite Renault's continued efforts to push on without its former CEO, the notion of a merger finally fell apart in May 2020.
"I thought that from a management point of view, a merger would be a mistake. Because all of a sudden the Japanese would appear as a second-rate citizen and that’s something I know is a basis of decline and the basis of lack of motivation," said Ghosn.
"I followed what happened between Daimler and Mitsubishi. One of the reasons Mitsubishi collapsed is because they didn’t feel motivated anymore. Stuttgart was the place where all the decisions were made, and the Mitsubishi people didn’t care about the results because they say at the end of the day if we make a profit, it’s gonna go to Germany. And they had no connection to that."
"Frankly, if I was forced to make a merger, I would have resigned. That would’ve been better for me, in a way," he added.
Ghosn says the Nissan-Renault-Mitsubishi alliance has become a "zombie" and that no beneficial work is actually being done—"a lot of talk and not much action," according to Ghosn. With the failed merger and the glue that once held the brands together now weakened, he predicts the alliance will eventually dissolve.
You can read the full interview here.
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