Carlos Ghosn’s arrest in Tokyo has put the Renault-Nissan-Mitsubishi alliance under intense strain and brought down one of the car industry’s most powerful figures. Prosecutors detained the Nissan and Mitsubishi chairman, and Renault’s chief executive and chairman, at Haneda Airport on November 19, 2018.
Nissan said an internal investigation, launched after a whistleblower complaint, uncovered what it called significant misconduct. The company said the findings were serious enough to remove Ghosn and Greg Kelly immediately, with the board due to formalise that decision on November 22, 2018.
Renault said it supported Ghosn, but its board suspended him from his roles while the inquiry continued. Thierry Bolloré was named interim chief executive, while Philippe Lagayette was appointed acting chairman. Mitsubishi was expected to take similar action.
Ghosn has not been heard from since the arrest. He is accused of under-reporting his pay to regulators and in stockmarket filings by about ¥5bn ($44.4m) over a five-year period beginning in 2011. He also faces an allegation that he failed to declare use of Nissan-owned properties in several cities, including Beirut, as a perk.
Shortly after the arrest, Nissan chief executive Hiroto Saikawa used a press conference to attack his former chairman. Saikawa, who took over when Ghosn stepped down as chief executive in 2017, downplayed Ghosn’s role in Nissan’s recovery and called his concentrated power a negative aspect of the long regime.
The scale of Ghosn’s rise had been extraordinary. He was credited with rescuing Nissan from bankruptcy in 1999, and later became a symbol of Japanese business success. Under his leadership, the alliance grew into the world’s biggest carmaker, with output set to reach 11 million vehicles that year.
Analysts have suggested that the case may also reflect a shift inside Nissan. They say conduct that was once tolerated may now have been turned against Ghosn, helped in part by a new Japanese law that encourages companies to expose wrongdoing in exchange for more lenient treatment.
Another theory is that an anti-Ghosn faction inside Nissan, frustrated by his autocratic style and his loyalty to Renault, alerted the authorities. That view is tied to long-running resentment over the alliance’s structure.
Renault owns 43.4% of Nissan, while Nissan holds a non-voting 15% stake in Renault. Mitsubishi is controlled by Nissan through a 34% stake. Renault is 15% owned by the French state, yet most of the revenues, volumes and profits come from Japan, a balance that has fuelled bitterness in Nissan over time.
There was also concern in Japan about a possible French-led takeover. Ghosn wanted to make the alliance irreversible and push for deeper cooperation, with a merger widely seen as a possibility. That prospect alarmed senior figures in Nissan and also worried the Japanese government, which did not want a major domestic company effectively run from Paris.
The fallout leaves the future of the alliance unclear. Renault and Nissan have both pledged support for the partnership, but their share prices have fallen sharply. Replacing Ghosn will be difficult, not least because succession planning appears to have been weak under his concentrated leadership.
If the alliance unravels, the two companies would be left as separate carmakers with weaker mass-market brands and less scale for the huge investments needed in electrification and autonomous technology. Even if it survives in its current form, it may struggle to match rivals such as Volkswagen and Toyota. Ghosn’s removal may yet prove justified, but it has left the group facing deep uncertainty at a time of major change in the car industry.
