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Opinion

Nissan's new chief executive inherits bitter, divided company

Alliance with Renault is no less strained than when Carlos Ghosn was in charge

Divorce may be temporarily cathartic, but regrets and misgivings often follow.   © Reuters

The announcement, coming up on a year since the arrest and ouster of Carlos Ghosn, Nissan's chairman, that the "New Nissan" would be managed by three executives, each with differing perspectives and loyalties on bitter divisions roiling the auto group, is a suspension of those hostilities -- but one without any clear shared vision for reconstruction and reconciliation.

The opening shot had been Ghosn's plan to merge Renault, Nissan Motor and Mitsubishi Motors, already in an alliance secured by cross-shareholdings, under a Dutch holding company to be controlled by Renault.

This led to panic within the ranks of Nissan's Japanese managers, already brimming with resentment from years of having to prop up Renault and take orders from Ghosn and others without roots in or loyalty to Nissan or Japan.

Nissan's Japanese managers turned to the Japanese government for help, dredging up stale allegations -- which he denies -- of self-dealing and corner-cutting by Ghosn. Government prosecutors arrested Ghosn in November 2018, effectively removing him and thereby blocking his merger plans.

The Nissan executives behind the surprise arrest and revelation of Ghosn's alleged misdeeds hoped they would lead to divorce and independence, with Renault selling off its Nissan shares. But they overplayed their hand, overlooking fundamental problems and prompting strife which will continue to undermine the new bosses.

First, the primitive means used to oust Ghosn and scuttle the merger became an international and diplomatic embarrassment. Japan's use of its criminal justice system as a weapon in a private shareholder dispute; Ghosn's prolonged detention; and the apparent demand that Renault surrender its rights as shareholder turned into a public relations disaster.

Secondly, Ghosn's ouster uncovered slack governance within Nissan. Chief executive Hiroto Saikawa, leader of the palace coup, had received excess payments in a share incentive scheme, an investigation by Nissan found, and he was pushed out last month.

Finally, and perhaps most decisively, Nissan's announcement of a 95% fall in its first quarter profit raised questions about whether its management had any realistic plans to survive going alone in a brutally competitive and chaotic global market. Divorce may be temporarily cathartic, but regrets and misgivings often follow.

The appointment of a triumvirate from rival factions to lead the New Nissan indicates there has been a truce: there will be no merger, nor will there be a divorce. The parties will muddle along in their unhappy marriage.

The new CEO Makoto Uchida is the archetypal compromise candidate. (Courtesy of Nissan)

The new CEO, 53-year-old Makoto Uchida, is the archetypal compromise candidate: from within Nissan, but not associated with the leaders of the palace coup. He is also "international" and English-speaking; received a theology degree from a Japanese university; and spent the first decade of his career working overseas for trading company Nissho Iwai.

Flanking him will be Ashwani Gupta, an Indian citizen and career Renault employee, as COO and Jun Seki as vice-COO. Seki is a longtime Nissan employee described by board member and head of Nissan's nomination committee Masakazu Toyoda as having been chosen because of his technical competence, i.e. he is a "nonpolitical" Nissan representative.

Jun Seki is a nonpolitical Nissan representative. (Courtesy of Nissan)

At the news conference announcing the appointments, Toyoda paid lip service to the alliance with Renault, clearly signifying Japan has abandoned the divorce option. Yet no one has offered a persuasive scenario for a flourishing arrangement either.

The obstacles to a minimally functioning marriage seem daunting. Most of the positions within Nissan that Ghosn established to promote "synergies" with Renault have been eliminated following Ghosn's exit. Nissan executives saw these as a life-support system for Renault, and in any event it will be a dead end to try and revive "synergies" that were not mutual in the first place.

Renault Chairman Jean-Dominique Senard recommended 49-year-old Ashwani Gupta.   © Reuters

It is unclear whether the abandonment of a three-way Renault-Nissan-Mitsubishi merger means that Renault has also given up ambitions for its own merger with Fiat-Chrysler, an event that would further alienate Nissan.

In Nissan's eyes, propping up one faltering European car company for 20 years has been bad enough. It would be beyond bearing if Renault, by means of a merger with Fiat-Chrysler, smuggled its Italian cousin into the alliance's corporate welfare program funded by Nissan.

None of the three newly appointed executives, acting alone or together, would appear to have the authority to resolve these intractable and highly emotional issues. The past year has imposed further stress and fatigue on a marriage that was imperfect to begin with, just as the market itself its spinning in unpredictable new directions.

Even if the marriage was not meant to be, those who botched the divorce have much to answer for.

Stephen Givens is a corporate lawyer based in Tokyo.

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