The implications for the Nissan and Infiniti brands in the US, and for brands such as Renault in Europe, aren’t at all clear. And maybe there won’t be huge effects.
But the news that Carlos Ghosn is likely to be removed from his post as head of Nissan and Renault over “financial misconduct” continues the stunning turnover at the top of some of the most important global automotive brands in just the last several months.
And there’s no way that is a good thing as companies struggle for share in an auto market that has cooled somewhat in many major markets, and as Nissan-Renault and all major carmakers piece together their strategies for electrification and autonomous driving in an industry rife with technology-driven change.
Japanese authorities arrested Ghosn in Tokyo on Monday, and Nissan said it intended to oust him from his job as CEO after uncovering “significant acts” of financial misconduct, some of which reportedly involved understating his compensation in securities filings by about $44 million.
The Nissan board was said to be planning a meeting for Thursday where it is expected to oust Ghosn and Greg Kelly, another Nissan executive who was arrested for under-reporting of compensation in securities filings. Nissan said that it had uncovered numerous other financial abuses by Ghosn “such as personal use of company assets.”
Ghosn is chairman of Nissan, CEO of Renault and chairman of Mitsubishi, and was the architect of the alliance among the three companies that has become one of the strongest forces in the global automotive industry and a pioneer in vehicle electrification.
There’s been more turnover at the top of auto companies worldwide than in recent memory, including at Volkswagen and at Fiat Chrysler. Herbert Diess was installed as chief of Volkswagen last spring, taking over from Matthias Mueller in muddied circumstances, and Rupert Stadler, boss of the Audi unit of VW, was arrested in the company’s Dieselgate scandal last summer and then fired.
Also over the summer, Sergio Marchionne, CEO and builder of the Fiat Chrysler turnaround, died rather suddenly from complications of surgery after the extent of his health problems apparently was shielded from the board.
Over two decades Carlos Ghosn built a global alliance between French carmaker Renault and Nissan of Japan. Now, after allegations of 'serious misconduct' one of the car industry's most powerful executives is facing removal from both companies.
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And earlier this month, Robyn Denholm was named new chair at Tesla, following Elon Musk’s settlement with the SEC related to misleading claims that he had arranged a deal to take Tesla private.
Ghosn became Nissan’s chief operating officer in 1999 and CEO in 2001. Last year, he stepped down as Nissan’s CEO but retained the title of chairman. He built the three-company alliance from unlikely origins into a stable force in the industry, surviving the Great Recession of 2008 and also a long period of sluggishness in European auto sales after that.
He “balanc[ed] three different companies with demanding elegance,” said Rebecca Lindland, executive analyst at Kelley Blue Book.
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But while Ghosn’s legacy is huge, it wasn’t unsullied even before his arrest. “Ghosn was ahead of the game when it came to automotive consolidation, and he did it in a unique way,” said Michelle Krebs, executive analyst at Autotrader. But he “never achieved his vision for an all-electric world; far from it. He also issued the edict that Nissan would capture 10 percent market share in the U.S. That led to bad and unprofitable behaviors including huge discounting and giant fleet sales that resulted in slumping resale values.
“Nissan also has had its share of quality problems as part of grinding out volume to snag market share.”
Ghosn said he hoped he could cement the alliance so that it would survive his eventual departure. Now, the three companies must test, ahead of schedule, what he built.
As Lindland noted, “The alliance will continue without him, but this misconduct will cause disruption and uncertainty at the top for a while.”