Posted on Nov 17, 2019 at 7:00 pm
You were close to Carlos Ghosn. How did you experience the scandal?
I knew that on the ethical level, Carlos Ghosn was “borderline”, but on small things. I would never have imagined such serious things. A few days after his arrest, Nissan offered to see me the folder subject to confidentiality. What I saw made me sick.
What were the consequences of the case on the Alliance?
The deterioration in relations between the two groups had begun well before, but it accelerated. Carlos Ghosn had gradually detached from operations, very clearly with Nissan, but also with Renault. The only thing that interested him was the hunt for volumes to become the world’s number one , even giving instructions that were shorting the CEO of Nissan. The rest, during that time, has deteriorated. Even simple decision-making on common subjects has slowed down, leading to endless discussions between Japan and France. And the man who could have sliced easily was less and less involved. As a result of a lot of friction, a lot of frustration and little by little, lies that settle and bad faith. Exchanges of senior executives, particularly from Nissan to Renault, have also become scarce. This led to a huge degradation of the spirit of the Alliance, even before the arrest of Carlos Ghosn.
What is the situation of the Alliance today?
Most of the meetings between the two companies, including the basic engineers, have stopped. Work continues to work on projects already started, but there are no new projects. The Alliance, it must be much more than that. The risk is that the specifications of the two engineering teams diverge, and that there is more commonality at all. There has also been a deterioration in transfer prices, invoiced by a company to a partner for the purchase of certain parts or the use of production lines. This can be dramatic, especially for Nissan Europe, which relies heavily on Renault for its fabrications. Another example is the new WLTP certification standards: Renault was late preparing for it, and Nissan Europe was the first to suffer. As a result, Nissan collapsed completely in volumes. When you make a mistake like that, you have to share the consequences, and not make your partner bear everything.
How do you explain the current difficulties of both groups?
Nissan suffers from the race for volumes wanted by Ghosn, especially in the United States. This has led the manufacturer to equip to manufacture 7 million cars a year, while they sell 5.2 million: these very large overcapacities weigh on fixed costs. On the other hand, engineering has probably been left too much to herself. This may have resulted in increased direct costs, and delays in model exits in some strategic markets.
And at Renault?
The situation is also very degraded, as shown the profit warning of the third quarter and difficulties in generating cash. The company has mismanaged the problem of CO2: some models are afflicted with a penalty while it is not the case of directly competitive models. To continue to sell, you have to make discounts that destroy the operational profit.
Can we pick up the pieces?
Renault is now managed in panic mode. The group must first fall on his feet to be able to work serenely medium term with Nissan. We have to put all the problems on the table, internally and with the financial markets, without which we can not mobilize the teams. To revive the Alliance, projects should be announced that could lead to rapid victories. And in the longer term, rest the question of making joint subsidiaries. For all this, it is essential to regain confidence in the relations between the two companies. Ideally, it would be necessary the next general manager already knows Nissan. It would be a phenomenal gain of time, but I am not sure that we will take the path.