YOKOHAMA, Japan – In a big step toward rapprochement, the heads of Renault, Nissan and Mitsubishi announced a new power-sharing agreement on Tuesday that charts a "new start" for an auto alliance rattled by the indictment of its former Chairman Carlos Ghosn.
Renault, which has a controlling stake in Nissan, said it would not seek the chairmanship of Nissan, while also agreeing to a consensus-based alliance governing board as alliance leaders sought to defuse the tension that has threatened to derail the world's largest auto group.
In their first joint address since Ghosn's Nov. 19 arrest, Renault CEO Thierry Bollore, Nissan CEO Hiroto Saikawa and Mitsubishi CEO Osamu Masuko announced a new four-member Alliance Operating Board to oversee all operations at the 20-year-old partnership.
The board will include the three CEOs and be chaired by Renault Chairman Jean-Dominique Senard, who took the helm of Renault in January following Ghosn's resignation. Senard also attended the news conference on Tuesday at Nissan's global headquarters here south of Tokyo.
The companies said the new arrangement would have no impact on the Revised Alliance Master Agreement that outlines relations between the companies. It would also not impact the cross-shareholding structure. Both will both remain unchanged. Definitive agreements will be signed in conjunction with the March 27 anniversary of the Alliance, the parties said.
The news conference was an upbeat affair, with all parties talking positively about a rebalanced beginning to a new future.
Saikawa, who had been dour in the months following Ghosn’s arrest, was all smiles. "For the alliance, this memorandum of understanding is a big new step,” Saikawa said. “This is a true partnership on equal footing… It’s a win, win, win approach based on consensus.”
Extending an olive branch to Nissan, Senard said the reboot would ensure autonomy. "We want to enhance the spirit of this alliance and recreate the spirit the way it was at the very beginning of this alliance at the end of the 90s," Senard said. "That is an alliance that is based on the total balance and fast decision-making process, totally respectful of the cultures of our companies, respectful of our brands."
The move struck a strong chord of unity following a period of upheaval.
Renault initially recoiled in distrust at Nissan’s abrupt turn against Ghosn amid speculation about a boardroom coup by Japanese executives opposed to a possible merger of Nissan and the much smaller Renault.
Nissan, meanwhile, has struggled to shore up internal corporate governance.
Senard and Bollore sidestepped questions about Ghosn’s purported plans to bind Renault and Nissan into a tighter partnership, perhaps through a merger under a holding company.
In the first interview following his arrest, Ghosn told Japan’s Nikkei in January that he had planned to do so and had broached the issue last year, triggering vehement opposition from Saikawa. Senard and Bollore said the current focus in on the future, not the past.
Saikawa conceded, without giving details, that there were many proposals being floated in the past but no official plans. He said he was simply giving his feedback on the ideas.
Senard also declined to comment on the indictments of financial misconduct leveled against Ghosn, saying the former chairman is innocent until proven guilty.
Ghosn, who was released on bail March 6, faces three indictments in Japan and faces up to 10 years in prison if found guilty. He denies the charges and trial is likely still months away.
"As long as there is no judgment on these facts, we cannot utter a word," Senard said.
Senard said he would not seek to be Ghosn’s replacement as chairman of Nissan.
The joint communique seemed to carve out a role for him as vice chairman, calling him a "natural candidate" for that position. The sides agreed to wait on a chairman decision until a committee charged with improving corporate governance at Nissan comes back with its recommendations.
"We have now reached a level of maturity that tells us that we need to go to a further step, a new step, what we could call today a new start to the alliance," Senard said. "The structure we are deploying before you is now the best way forward."
Faster decisions
A key priority of the overhaul is to speed decision making on joint projects, the executives said. Saikawa said the alliance lost slowed down on product as it increasingly obsessed about convergence, the alliance term for merging operations in a quest for cost savings.
"We were too much focused on convergence. People should have been more focused on project,” Saikawa said. “We want to change the speed of our operations."
Alliance business will now be streamlined by organizing operations around so-called projects headed by one person across all companies. That person will report directly to the board.
The companies did not offer further details about who would lead what projects.
The new board will be the final arbiter on alliance business, superseding other alliance entities, including joint ventures set up between the partners in the Netherlands: Renault-Nissan BV and Nissan-Mitsubishi BV. Those joint ventures have become a focal point of investigation following allegations of financial misconduct by Ghosn during his time at Nissan.
In January, Nissan and Mitsubishi said Ghosn received about 7.82 million euros ($8.9 million) in allegedly improper compensation last year from Nissan-Mitsubishi BV, their 50-50 venture.
NMBV was established to reward employees who find synergies by giving them a share of the savings. But Nissan and Mitsubishi claim Ghosn used it to authorize large payouts to himself.
Mitsubishi Chairman and CEO Osamu Masuko said Mitsubishi and Nissan would discuss what to do with NMBV. But he said he can’t imagine it continuing in its current form.
Both sides may wind down the entity, a source familiar with the matter said.
In a related move, Nissan and Renault are considering scaling back the profile of their 50-50 Netherlands-based joint venture, Renault-Nissan BV, or RNBV, the person said.
The newly created Alliance Operating Board will replace the governance functions of RNBV, but that entity will continue to exist as a kind of backup to the board.
Renault and Nissan launched an investigation of RNBV last month, following the indictment of Ghosn in Japan on three charges of alleged financial misconduct at Nissan.
The probe of RNBV was expected to be completed by mid-March.
'Corporate diplomat'
Senard said he would rally his reputation as a corporate diplomat to smooth out differences between the companies and build consensus, without seeking to dominate or upstage his counterparts.
But stressed that all parties must remain committed to the alliance’s founding principles of pooling resources to survive in an increasingly competitive automotive landscape.
"If this alliance shows what it promises, it’s going to be absolutely unique in the world," Senard said. "The world will be surprised by the strength of this coming together."
Renault, which rescued Nissan form bankruptcy in 1999, has a 43 percent controlling stake in Nissan while Nissan holds a 15 percent, non-voting stake in Renault, whose top shareholder is the French government.
