There’s no doubt that GM could become Ghosn Motors with Carlos Ghosn running GM, Nissan and Renault. There are perfectly good strategic reasons that could force through an agreement and create a vehicle builder with a quarter of the world market. But would it be a good thing in the long run?
Go deeper with GlobalData
Depends what you mean by long; it would have to be longer than DaimlerChrysler for example, for anyone to be certain whether it was actually working for the shareholders or not. That “merger of equals” is still a loss-maker for the consenting Daimler-Benz shareholders.
Ghosn could push for it because he thinks he knows how to extract value. The Nissan revival was considered mission impossible for a Westerner because of the tradition and cultural imperatives in Japanese industrial society. Ghosn sliced through all that in an instant.
The US is similar in a sense, in that there are huge inherited assumptions that are never likely to be fully queried by a local. Do the natives really want cheap, ugly, fuel-hungry iron in those quantities? Will the UAW really not accept economic partnership and co-determination?
But the other reason for him to push himself forward with an offer to run the show is to defend his own position and reputation. The US is where Nissan makes all its money – point one. Ghosn is in a far better position to defend that profit centre if he also has control of the market leader.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataSecond: Ghosn is on a promise to do two things since the publication of his corporate plan for ‘Nissault’. He has strapped himself to a forecast of 6% margins by 2008. And he has acknowledged that margins that high are not sustainable without having a premium brand to sell.
His nightmare is that within 12 months or so, he is going to have to admit that he can deliver neither. After Nissan’s fabulous run of success since his intervention five years ago, the steam is slowly hissing away. Nissan sales are falling in the US, Japan and Europe.
And in the matter of luxury cars, there are three possibilities with the General in the team. In addition to Infiniti possibly becoming the luxury platform for Nissault, Cadillac and Saab could be strengthened and internationalised.
Ghosn Motors would be the group with the strongest position in the principal markets being either number one or two in the US, Europe, Japan and China. How miffed would Toyota be to see that happen when it is within one final stride of becoming the world’s largest car producer.
From Rick Wagoner’s point of view, the thought of a battle-hardened stranger riding into town with an appetite for righting the wrongs and tackling the impossible has got to lift the spirits. The whole GM board is weary with its struggle. There has to be at least an even chance that they would annoint King Carlos with pleasure.
How the plan works in practice will need Ghosn, the heavenly host and a top-down view taken from Pluto to sort out. It is a rat’s nest of plague proportions. Which factories get shut; who gets the design responsibility, which brands get the chop (Vauxhall would have to be high on that list).
But it is the way of these things that the practicalities of a merger and the industrial consequence comes long after two parties with a shared problem get together over a gin and tonic and agree to dance.
The next few weeks will be fascinating. Ghosn Motors is a going concern. It would be quite wrong to bank on it though. Take the bet at five to one or better.
Rob Golding
