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With Ghosn Gone, Does Nissan Have Much of a Future?

Well, the former CEO was already out of the picture—but now he's jumped bail in Japan for Lebanon.

Carlos Ghosn has skipped his $14-million bail in Tokyo for Beirut, where he can talk to his wife as well as to the press. Now he can speak freely about his apparent efforts to turn the Nissan-Renault alliance into a merger, which Ghosn and his allies believe caused the Japanese company to fire him as chairman and turn him in to local authorities for alleged financial improprieties.

The allegations are a mess. Nissan says Ghosn understated the income he received from the automaker, and that he used company funds to cover his personal financial losses. He was jailed in Tokyo in November 2018 along with Nissan board member Greg Kelly, an American citizen. Ghosn was released on bail and held under house arrest at his Tokyo apartment, but then arrested again in April 2019 after announcing plans to hold a press conference to speak about his case.

Alliance partner Renault stood by Ghosn initially, but in the past year he has been fired as chairman of the French company as well as by Mitsubishi, which joined the alliance, now 20 years old, in 2015. Though Renault purchased a large share of Nissan in 1999, Nissan is the larger of the two automakers, with more global reach and having contributed more profit to the alliance's bottom line for much of two decades. So Nissan, which became the first Japanese company of any sort to be run by a non-Japanese executive has been reluctant to give up any more control to Renault.

This is a mistake.

With its Leaf electric vehicle program, Nissan has been a leader in EV development for much of those last two decades, and it is keeping up with the competition in terms of autonomous technology development. Most of Nissan's competitors are either looking at mergers or joint venture technical development of their own, or they should be.

General Motors and Honda have an agreement on EVs and fuel cell powertrains. Ford Motor Company is aggressively working with tech companies like Argo AI to become a "mobility" company in the '20s. Mighty Toyota isn't talking merger, but is helping prop up smaller automakers like Mazda and Subaru while working with BMW, and even Mercedes-Benz and BMW have joint agreements.

Nissan and Renault, and especially Mitsubishi, need to consider the model created by the recent merger of Fiat Chrysler (which had been in talks with Renault) with PSA Peugeot-Citroën. Like Fiat Chrysler Peugeot Citroën, or whatever it is called, Nissan and Renault will be stronger automakers as one company than they will be as two. The Renault Nissan Mitsubishi Alliance reported it sold more light vehicles, 10.6 million, than anyone else in 2017; employs a total of 450,000; and controls a Volkswagen Group-like roster including Infiniti, Renault Samsung, Dacia, Alpine, Datsun, Venucia, and Lada. As with Fiat Chrysler and Peugeot-Citroën with its recent merger, some of these Alliance brands will have to go.

In the past couple of years, especially since Ghosn's arrest, Nissan and Renault have suffered plummeting sales and net revenues. Nissan-Infiniti, once a rival to Honda-Acura as the fifth-bestselling automaker in the U.S. has been sliding even in a relatively strong market. Mitsubishi continues to post sales gains in the U.S., but only relative to early in the '10s when it barely survived remaining here.

Some of Nissan's problems might be attributed to "Le Cost Cutter" Ghosn, as its models have suffered for their cheap look and interiors in recent years.

Sales are down globally for Renault, Nissan and Mitsubishi according to news reports. This comes as all automakers face huge expenditures in EV and autonomous vehicle research & development that will decimate the profits they have been enjoying from big trucks and sport/utility vehicles. No matter what you think of Ghosn and Nissan's allegations of financial impropriety, any effort to fully merge Renault with Nissan and Mitsubishi would have been better for both the Japanese and the French automakers.

This is not to excuse Ghosn for any of these allegations, if true, though his treatment in Japanese courts so far has clouded the veracity of those accusations.

"I have not fled justice," Ghosn said in a statement from Beirut, according to the Washington Post, which published a letter from his wife, Carole Ghosn, last April in which she said her husband was being kept in solitary confinement with lights on 24 hours a day. "I have escaped injustice and political persecution." He promises to speak to media from his adopted homeland of Lebanon next week.

If true, the allegations against Ghosn are very serious, however, especially the charge that he covered personal financial losses with Nissan funds. But Ghosn has a point about "political persecution" when you consider that his successor as Nissan chairman, Hiroto Saikawa, resigned in September 2019 "over alleged financial misconduct" according to the Post. Japan's security regulators also have since fined Nissan $22 million for "inaccurate financial disclosures." To date, Saikawa has not been charged with a crime.