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Carlos Ghosn speaks to The Nikkei on Feb. 23.
Business

What will life after Ghosn mean for Nissan?

With superstar boss stepping aside, tech will decide automaker's fate

TOKYO -- Nissan Motor is speeding into the unknown, now that longtime leader Carlos Ghosn has announced his resignation as CEO.

Ghosn joined the automaker in 1999, when it was on the brink of collapse, and engineered a dramatic turnaround. Though he will stay on as chairman with representation rights, his departure from the vanguard of management this April is a prelude to a bigger, perhaps more jarring transition for Nissan.

Few question Ghosn's management chops. Former U.S. President Barack Obama's administration once courted him to revive a reeling General Motors after the global financial crisis of 2008. Prior to that, a troubled Ford Motor had sounded Ghosn out about taking its helm.

Ghosn declined both offers, but they were a testament to his achievements at Nissan.

He started out at Nissan as chief operating officer, coming over from French automaker Renault, which had acquired a stake. He became the Japanese company's president in 2000 and was named CEO the following year.

His management style can be summed up in a few words, all of which start with C: cost-cutting, cosmopolitan and charismatic.

The 10 million club

Unbound by old ties, Ghosn took bold steps to slash Nissan's expenses. He did not hesitate to close plants and review relationships with partner companies. He sharply reduced the number of suppliers, triggering an industrial shakeout in Japan. The merger of major steelmakers NKK and Kawasaki Steel was one example of this.

Nissan will have to clear new hurdles without Carlos Ghosn in the CEO's seat.

Some in the Japanese business community dubbed all this the "Ghosn shock." But as Nissan's results improved, Ghosn's toughness garnered widespread respect.

Ghosn's diverse background, meanwhile, may have helped him move between cultures. His grandfather migrated to Brazil from Lebanon. He was born in Brazil, and educated there as well as in Lebanon and France. He worked in Brazil and the U.S. when he was with French tire manufacturer Michelin. Since joining Nissan, he has continued to jet around the globe on business, including to China and Russia. 

At the Japanese automaker, Ghosn assigned employees based on ability and resourcefulness -- not nationality. Maximizing in-house resources became the foundation of Nissan's revival. 

While Ghosn may deny that he is charismatic, the force of his personality surely played a role in his success as well. He clearly took the initiative in driving management reforms and inspired his workforce.

Today, the group is on the cusp of the auto industry's "10 million club."

The Nissan-Renault alliance announced on Feb. 8 that it sold 9,961,347 vehicles worldwide in 2016, up 17% from 2015. The tally includes Mitsubishi Motors, in which Nissan acquired a 34% stake last year.

The three-way alliance is now just behind Volkswagen, which sold 10.31 million, Toyota, which moved 10.17 million, and GM, which sold 10 million.

Economies of scale, however, can only take an automaker so far. 

New ballgame

Ghosn's alliance strategy brought down procurement costs, streamlined sales efforts and eased the financial burden of research and development. But Nissan must still contend with the breakneck pace of change in the auto industry. Next-generation green cars, artificial intelligence and self-driving technology are destined to spread.

Automakers face the challenge of incorporating new technologies developed in places like Silicon Valley, along with the question of what they should develop on their own. 

The management challenges facing Nissan now are completely different from those when Ghosn came on board. Put another way, the days when problems could be solved through scale are over.

Nissan is entering a second phase, where its fate will be determined by how it deals with technological shifts. 

Since Ghosn will be sticking around as chairman, Nissan will not have to get used to life without him cold turkey. He will also retain his post as Renault CEO while serving as Mitsubishi Motors chairman. 

Nevertheless, Nissan will need to come to grips with Ghosn's absence from day-to-day management. Without him, can it maintain a corporate culture that accepts innovation from diverse sources? Can the group successfully manage its new, staggering scale? 

An Obama administration official, who wanted Ghosn to run GM, said the success of the Renault-Nissan alliance is largely thanks to the CEO's personality and management ability -- and that the jury is out on how it will fare without him.

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