How Nissan-Renault Became a ‘Masquerade of an Alliance,’ According to…

Former Nissan chief Carlos Ghosn’s breathtaking fall from grace over accusations of financial impropriety, followed by months of solitary confinement and house arrest in Japan, caught the public’s imagination. Now, after a spectacular late-December escape from Japan, the former auto industry titan who oversaw the Renault-Nissan Alliance for roughly 15 years is seeking to clear his name—and lay blame.

During an over-two-hour press conference Wednesday he focused on what he called a rigged Japanese justice system. In the process, he also spoke at length about what he described as the dire state of the Franco-Japanese automotive alliance, the conspiracy against him that grew right under his nose at Nissan’s Yokohama headquarters, and his frustration with the missed opportunity to engineer a tie-up with European rival Fiat Chrysler (FCA).

Here are five key takeaways from Ghosn’s statements, made from Beirut where the Lebanese national currently plans to reside for now:

1. The alliance began to crumble after Macron power grab

Once thought to be lasting, the foundation of the Alliance started to rot after France gifted itself double voting rights in Renault, as well as other French corporations, in 2015. A driving force behind the enabling Florange Act, named after a Mittal Steel plant the government threatened to nationalize, was up-and-coming economy minister Emmanuel Macron, now France’s president.

“This left a big bitterness with our friends in Japan, not only with management but with the government, because they considered it unfair that Nissan had 15% of the shares in Renault and zero votes, and France had 15% and double the votes,” Ghosn said. “This is when the problem started.”

2. A holding company, rather than a merger, was planned to balance competing interests

Much of the speculation surrounding his fall from grace centered around Ghosn’s purported plans of a Renault-Nissan merger—which some saw as the genesis of the plot to remove him.

It was not quite that way, he told reporters on Wednesday. Rather, he wanted to preserve a strong degree of independence for each side with separate headquarters and executive committees—one in Japan and the other in France. This would be accomplished by issuing stock in a “new Alliance” holding company led by a single board for which investors would swap their shares in Nissan and Renault, he indicated.

“It was not a full merger,” he told reporters. “I was trying as much as possible to overcome the resistance coming from the Japanese who wanted to be very autonomous, and on the other side the French, that wanted a full merger. It was a very good balance.” Instead, he alleged, fractious elements within Nissan decided it was easier to just get rid of him.

3. FCA was on verge of joining Ghosn’s Alliance

For the auto majors, scale is key as the biggest manufacturers push deeper into existing markets and into development of electric vehicles. In recent years, one of the automakers most determined to partner up has been Fiat Chrysler Automobiles (FCA). Its on-again-off-again courtship with Renault and Ghosn were hardly a secret.

That’s a moot point today.

In December, Groupe PSA and FCA forged a tentative agreement to merge. Such a deal might never have happened were it not for the plot by the Japanese to remove Ghosn, Ghosn himself claims.

Ghosn told reporters he was in the process of recruiting FCA as the fourth pillar to Renault-Nissan-Mitsubishi when he was arrested. He claimed the two sides were just weeks away from securing an agreement with FCA Chairman John Elkann in a last round of talks scheduled for the start of 2017.

“I had a planned meeting in January for a kind of final conclusion of the deal,” he said at the press conference. Instead, he found himself remanded into custody in Kosuge Detention Center awaiting trial. FCA, despite a brief public dalliance last May, chose to go with PSA. “The Alliance missed the unmissable, which is Fiat Chrysler. It’s unbelievable, how can you lose this huge opportunity to become the dominant player in this industry?”

4. Nissan conspirators named; Japan’s Abe and Renault spared

Ghosn directed the full force of his attack at the brass residing in Yokohama HQ. There, he claimed, plotters including his own successor as CEO, Hiroto Saikawa, had collaborated illegally with prosecutors to convict him on bogus, trumped-up charges. Ghosn fingered several other Nissan execs as well, including Masakazu Toyoda, a former veteran trade ministry official heading the board’s nomination committee, as the cabal’s key link to the government. To protect Lebanese interests, Ghosn stopped short of naming co-conspirators in Tokyo, but added he did not believe it reached as high as Prime Minister Shinzo Abe.

Asked if Renault bore any blame, Ghosn explicitly excluded his former employer. “Everything that happened to me in Japan is linked to Nissan. Renault is not in the loop, and I don’t intend to deviate attention from the main [culprit].”

5. Alliance exists only on paper. But, a steady hand could still save it

Ghosn argued his Japanese enemies were right to believe that by eliminating him they effectively got rid of French influence as well. “When you see exactly what is happening today, Renault has very little influence on what’s going on at Nissan,” he said. The result was a market cap decrease in Nissan of over $40 million a day since his arrest, and a €20 million daily decline at Renault, despite the overall automotive sector on average increasing in value by 12%.

The Brazilian-born executive was merciless in his judgement of the post-Ghosn Alliance, “There is no more growth, there is no more increase in profit, there is no more strategic initiative, there is no more technology, and there is no more Alliance. What we see today is a masquerade of an Alliance,” said Ghosn, adding “It’s not going to go anywhere.”

In order to salvage the auto partnership, the world’s second biggest in terms of vehicles sold (in 2018), Ghosn said a strong and steady hand on the tiller was needed—i.e. Someone like himself—to offset the centrifugal forces inherent in the two organizations. “Consensus doesn’t work. You have to make sure that you force people to go for synergies (…) if you leave them to themselves and you say it’s consensual, nothing happens.”