Carlos Ghosn: The Fugitive & Management Genius EPILOGUE
Tags: Carlos Ghosn, Nissan, Automotive, Automotive Industry, Renault

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The Aftermath

Nissan was once a giant in the Japanese automotive industry. It fell into a slump in the 1990’s and then it had recovered earlier this millennium followed by over a decade worth of period of success. The giant was back from its slump.

But it is now in another one of its downward spirals…

At the time of writing this piece, Nissan is expected to file a net loss of up to USD$6 billion for the fiscal year of 2020. This is the company’s biggest ever operating loss. EVER. Period. (Sugura, 2020), a clear reflection on how the globally recognised automotive company has fallen.

On the state of the Renault-Nissan Alliance, Ghosn commented in a newspaper interview that the results are pathetic (Irish, 2020). Its easy to blame the pandemic, but, Ghosn was adamant that this was due to a lack of joint leadership, between Renault and Nissan.

As Ghosn puts it, there was a ‘distrustful distance’ between Renault and Nissan. It seems that effectively after Ghosn’s ousting, the distance between Paris and Tokyo, if its not physically far enough, have widen even further.

There was a clear problem in communication between Renault and Nissan, a problem which Ghosn was able to control during his time at the top of both organisations. Perhaps, what Ghosn was trying to say here was that there was no alignment between the two giant organisations.

Another clear indicator of both organisation falling on hard times are clear through their share prices. Between November 2018 and June 2020, share prices of Nissan and Renault have fallen up to 55% and 70% respectively. Comparatively, GM and Toyota shares have fallen by up to 12% and 15% respectively, despite the global pandemic.

Makoto Uchida, the CEO of Nissan since October 2019, blames a challenging business environment and a restructuring exercise, which ultimately caused the loss, and was confident that the company was able to recover from this horrific results by fiscal year 2023 with a 5% operating margin and 6% market share.

At the time of writing, current market share for Nissan global automotive operations stands at 5.73%.

Efforts Wasted?

Rome was not built in a day…

The cost cutting measures, the market share gains, the whole Nissan Revival Plan exercise and the Cross Functional Teams (CFT) highlighted in the previous pieces, have led Renault Nissan through a period of success, which eventually led to the creation of the largest automotive alliance in the world with the inclusion of Mitsubishi.

…but was all of Mr Ghosn’s effort was for naught?

One can argue that Mr Ghosn’s approach was for a different time and a different purpose, but what is clear is: if its not broken, don’t fix it.

The alliance’s trajectory is on a downward spiral at the moment. Both organisations are in a freefall state, and its difficult to see how both will recover unless drastic measures are taken. Understanding the problem and resolving the problem is the first step.

The Nissan Renault latest alliance acquisition/member, Mitsubishi, are not faring any better. What is clear is that it will be a difficult and tough road ahead for all 3 alliance member in 2020.

The global COVID-19 pandemic is certainly to be blamed for weaker demands, and this is a contributing factor to the global economic slowdown affecting everybody in the world. This pandemic will be a test to the mettle of the alliance, on its survivability for at least the next 3 years when, hopefully the economy starts to recover.

Mr Ghosn’s fate uncertain

Despite turning the fortunes of Michelin in South America, rescuing the once ailing Nissan, forming and helming the biggest automotive alliance in the world, Mr Ghosn is a fugitive of the law.

One can argue that his defence will not be able to defend Mr Ghosn’s case successfully due to Japan’s 99% conviction rate upon charging of a crime; hence this was the main reason he fled, but despite this, he still is a fugitive of the law.

His future is still uncertain at this time but it seems that it is highly unlikely he will be helming any global conglomerate with the magnitude of Renault Nissan Mitsubishi. To me, this is a waste of a great talent.

But the question remains. Was it sabotage? If so, who are the saboteurs? Or were the allegations true? Did he do the crimes that he was alleged to have committed?

Mr Ghosn’s claims of innocence seems to point to jealousy within his organisation. Creating and maintaining a multinational organisation, you are bound to make enemies. This quote, often attributed to Steve Jobs, rings true:

If you want to make everyone happy, don’t be a leader, sell ice cream…

References:

Eri Sugura (2020), Nissan expects another net loss of over $6bn in FY2020, https://asia.nikkei.com/Business/Automobiles/Nissan-expects-another-net-loss-of-over-6bn-in-FY2020 Nikkei Asian Review

John Irish (2020), Ex-Nissan boss Ghosn says Renault/Nissan results ‘pathetic’, https://www.reuters.com/article/us-nissan-ghosn/ex-nissan-boss-ghosn-says-renault-nissan-results-pathetic-idUSKCN24K0T6, Reuters

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