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November 27, 2018

Mitsubishi exec says alliance will survive current management upheaval

Mitsubishi Motors' (MMC) alliance with Nissan Motor and Renault can survive management upheaval, a top MMC executive said a day after the automaker fired Carlos Ghosn as chairman, citing financial misconduct.

By Olly Wehring

Mitsubishi Motors ‘ (MMC) alliance with Nissan Motor and Renault can survive management upheaval, a top MMC executive said a day after the automaker fired Carlos Ghosn as chairman, citing financial misconduct.

A Reuters report noted the future of the 19-year alliance, one of the biggest automotive groups in the world, had been thrown into doubt after Ghosn’s arrest on 19 November arrest and his subsequent ousting as chairman of both Nissan and, now, MMC.

Ghosn, 64, the architect of the alliance and its chairman, remains Renault CEO and chairman.

According to the news agency, alliance senior executives are due at their regularly scheduled meeting later this week in Amsterdam which Reuters sources said would start on Wednesday.

Executives are also expected to discuss Ghosn’s chairmanship of the alliance, one source at Nissan told Reuters.

Mitsubshi CEO Osamu Masuko said on Monday he would join the meeting via video conference while Nissan CEO Hiroto Saikawa, who remains in Japan, hadn’t decided whether he would travel for the meeting, two company sources told Reuters. Nissan declined to the news agency.

Reuters said a major longer-term focus is whether and how the capital alliance structure might evolve, as Ghosn, under pressure from the French government, had pushed for a deeper tie-up, including potentially a full merger between Renault and Nissan, despite strong reservations at Nissan.

Renault holds around 43% of Nissan, which in turn owns a controlling 34% stake in Mitsubishi Motors . Nissan, the biggest partner in the alliance by sales, has a non-voting 15% stake in the French partner.

Speaking to Reuters at a research and development center in Okazaki, central Japan, Mitsubishi executive vice president Mitsuhiko Yamashita said, regardless of the shape the alliance takes, the three companies would continue to source more parts together and leverage their ties to develop new technologies.

“I can’t say how the three-way partnership might evolve but, as car-making requires more and more new technologies, the days when a single car maker can handle everything on its own are going to disappear,” Yamashita, who was once Nissan’s top engineer, said.

He said the alliance would need to work out who would make decisions, and how, without the binding figure of Ghosn, but was confident the partnership was strong enough to withstand the challenge.

Renault and Nissan have a history of nearly 20 years, and we’re coming up on two years since Mitsubishi Motors joined,” he told Reuters. “The foundation on which the cooperation has been built is becoming strong so I have faith that we can work with that.”

Sealed in 1999 when Nissan was rescued from near bankruptcy, the Franco-Japanese alliance was enlarged in 2016 to include Mitsubishi and enabled the members to jointly develop products and control costs.

Reuters noted Yamashita’s remark echoed comments by Saikawa who told staff on Monday that the alliance remained important to generate synergies.

Saikawa also said that there was an “excessive concentration of power” on Ghosn and, in future, alliance members should communicate better to help preserve their independence.

Ghosn is in detention in Tokyo over suspicion of financial misconduct, including alleged understating of his income and personal use of corporate money.

He had denied those allegations, Reuters said, citing public broadcaster NHK.

He has not made public comments on those allegations and news media has been unable to contact him or his lawyers for comments.

Reuters added, in fresh allegations on Tuesday, Japanese media reported Ghosn had shifted personal investment losses incurred during the 2008 financial crisis to Nissan to avoid millions of dollars in losses for himself.

Citing multiple unnamed sources, the Asahi Shimbun newspaper reportedly said, when Ghosn’s bank had called for more collateral from the executive, he instead handed the rights over the derivatives trade to Nissan which effectively bore JPY1.7bn (US$15m) in losses.

Japan’s Securities and Exchange Surveillance Commission (SESC) discovered this incident during that year’s routine inspection, the newspaper said, according to Reuters.

Nissan told Reuters it could not comment on the report while an SESC spokesman told the news agency the watchdog could not comment on individual cases.

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