| cairns |
12-31-2019 07:26 AM |
(continued)
Quote:
Shortly after the arrest, a group of Renault executives, outside lawyers and financial advisers met frequently on the seventh floor of their headquarters near Paris to come up with a response. They called themselves Groupe Orange, a combination of Renault yellow and Nissan red.
The group worked through various scenarios, including a possible hostile takeover of Nissan, but that option was quickly dismissed because any victory would be pyrrhic, said one person involved in Groupe Orange. People at Nissan say any attempted takeover from Renault would create a revolt against French control, likely opposition from the Japanese state and mass resignations from Nissan engineers.
Instead, Groupe Orange decided to push for a merger. Mr. Senard, formerly chief executive of French tire maker Michelin, took on the task of persuading Nissan after he was appointed Renault’s chairman in late January. He quickly ran into resistance from Nissan veterans who wanted the Yokohama company to remain independent. Mr. Senard said the two sides aren’t currently talking about a merger.
The friction spread even to parts of the alliance where the companies had begun to work more closely together.
Renault and Nissan produce some vehicles and parts for each other to save money, particularly in Europe. At its factories in Spain and France, Renault makes engines and commercial vehicles for Nissan to sell under its own brand in Europe. As sales fell, Renault raised the prices it charged to Nissan, people familiar with the decision said, angering Nissan.
A Nissan Leaf e+ electric vehicle. PHOTO: KIYOSHI OTA/BLOOMBERG NEWS
At the same time, Renault complained about paying what it views as inflated prices for Renault versions of Nissan pickup trucks that the Japanese company produces in Barcelona.
The tense atmosphere, particularly at the top of Renault and Nissan, made striking deals difficult. “Both leaders at the time built their identity on opposing the other company,” said a person close to Renault, in reference to former Renault CEO Thierry Bolloré and former Nissan CEO Hiroto Saikawa.
The biggest problem at the alliance is a dramatic fall in net profit at Nissan. In its final full year under Mr. Ghosn it earned nearly $7 billion. Now the company estimates it will make $1 billion in the year ending March 31. Those weak results feed through to Renault, which, as a large shareholder of Nissan, records its share of Nissan’s profit on its own bottom line.
In the U.S., Nissan’s largest market, Mr. Saikawa, who was ousted as CEO in September, sought to lift profit by slashing low-margin sales to rental car agencies and raising prices for regular car buyers. Sales did fall—they were down 16% in November—but net profit hasn’t risen.
China, seen as a growth driver until recently, is shrinking, too. In November, Nissan issued its third quarterly profit warning this year.
The situation is no better at Renault, which relies on slow-growing Europe for more than half its sales. A new version of its best-selling model, the Clio hatchback, faced production issues, which delayed its launch in parts of Europe. The Zoe electric car faces a flood of new competitors.
Mr. Senard, who is also chairman of the alliance, called the recent performance at both Renault and Nissan “miserable” and “disgraceful.”
“This cannot go on and everybody understands that,” he said. Mr. Senard said the ousting of some troublemakers calmed tensions and would allow the alliance to fix its problems.
As a group, Renault, Nissan and third partner Mitsubishi Motors Corp. sell more cars than General Motors Co. and are roughly on a par with global leaders Volkswagen AG and Toyota Motor Corp. But size doesn’t mean much in the absence of further cooperation, Mr. Senard said.
“At the end of the day you’re lagging in terms of performance. You’re the worst in terms of the big four,” he said.
Mitsubishi joined the alliance in 2016 after Nissan bought a 34% controlling stake. The deal was praised within the alliance for the added scale a third partner brought, but Mitsubishi currently has few ties to Renault.
When Mr. Saikawa, the Nissan CEO at the time, in July announced a global restructuring that includes 12,500 job cuts, it didn’t include a discussion of the alliance.
This year, the companies ended Mr. Ghosn’s annual tradition of announcing how many billions of dollars were saved through what the companies call synergies. They were concerned it would look foolish when profits at both were plummeting. “I’d rather say nothing than say things I can’t justify,” Mr. Senard said.
People at both companies said they are tired of fighting. Some top executives have jumped ship to take jobs at major competitors. At Nissan, a new triumvirate at the top headed by Chief Executive Makoto Uchida took over on Dec. 1. One of the executives, Jun Seki, resigned weeks into his new job.
“The alliance is essential to our performance recovery and steadfast growth in the future,” Mr. Uchida said on his second day on the job.
When the heads of Nissan, Renault and Mitsubishi met in France in late November, they discussed pooling resources on research, engines and shared factories as well as a joint venture to develop future technologies, said people familiar with the discussions. The three have appointed an alliance general secretary, and they plan further personnel moves in coming weeks. Renault is looking for a new CEO, to succeed Mr. Bolloré, who was fired in October.
Seeing the endless squabbling is galling to Mr. Ghosn, who is living in a Tokyo house awaiting a trial set to start next year, according to a former alliance executive familiar with his views. “There is a point where the Japanese will say, ‘By the way, guys, why are we together?’ ”
|
They've always been fighting- Carlos held it together. And without him share prices, sales and profits have plummeted. He was without a doubt a very capable CEO. |
