Nissan, Renault should boost competitiveness with new system

The Yomiuri ShimbunThe world’s second-largest automotive group has begun full-fledged efforts toward maintaining its alliance. It is hoped that the latest move will mark a big step toward mending their relationship.

Nissan Motor Co., Renault SA and Mitsubishi Motors Corp. have announced the launch of a new organization, which will serve as an oversight body for strengthening their partnership. The four top executives of the three automakers will lead the organization.

The system in which authority over the operations of the automotive group was concentrated in the hands of defendant Carlos Ghosn — indicted on charges including aggravated breach of trust under the Companies Law — is to be changed into a consensus-based system.

According to Nissan’s investigations, the former system gave rise to the misappropriation of Nissan funds for personal use and other misconduct by Ghosn. Given that, the course of action for reforming the system is considered appropriate.

Yet a consensus-based corporate operating system also has a weakness in that decision-making can be delayed. Whether the new organization can handle operating decisions with a full sense of speed is to be tested.

The top executives of the three automakers held a joint press conference. It was apparently intended to convey, both at home and abroad, that the three automakers are moving in step with each other.

Renault Chairman Jean-Dominique Senard, also chairman of the new operating board, said, “We want to recreate the spirit the way it was at the very beginning of this alliance, an alliance that is based on fast decision-making process and respectful of our brands.”

Deepen partnership

Senard also suggested that he has no intention of seeking the post of Nissan chairman.

Renault, which holds a stake of more than 40 percent in Nissan, had considered integrating its management with that of Nissan and Mitsubishi, and the French government, the largest shareholder in Renault, has also backed such a move. With the new consensus-based system, Renault may have taken into consideration the position of Nissan and Mitsubishi, both of which want to secure their independence.

Nissan President and Chief Executive Officer Hiroto Saikawa said the new board will operate under a true partnership on an equal footing.

It is worrisome that there is still a cause for conflict smoldering among the three automakers and the French government over the issue of management integration.

Senard said the start of the new organization will not affect such matters as shareholder composition, but it is quite unlikely that the French government will readily change its stance of seeking management integration.

It was Renault that rescued Nissan when the Japanese automaker faced bankruptcy in the latter half of the 1990s. Today, however, Nissan by far exceeds Renault in such areas as sales and operating profits.

Should management integration be advanced forcibly, a backlash would be inevitable from Nissan and Mitsubishi, which is under Nissan’s umbrella. The three companies should first prioritize restoring the relationship of trust among them.

The automobile industry is in the midst of a revolutionary phase, as symbolized by the development of autonomous driving technology and the electrification of vehicles. A global-scale competition for survival is underway.

It was a blow to the group that the strategy of the three-way alliance was forced to stagnate in the wake of the arrest and indictment of Ghosn.

This is not the time for the three automakers to remain at odds with each other in the group. The three firms must deepen their partnership on the heels of the inauguration of the new overseeing organization.

(From The Yomiuri Shimbun, March 13, 2019)Speech


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