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Renault Chairman Louis Schweitzer, right, shakes hands with Nissan Motor President Yoshikazu Hanawa at a press conference announcing the partnership of the two automakers.
My Personal History: Carlos Ghosn

Carlos Ghosn (10) The birth of the Nissan partnership

Ghosn helps seal the deal with a presentation on slashing costs

| Japan

My journey to Nissan Motor began with the "merger of equals" between Daimler-Benz and Chrysler. This historic partnership was announced in May 1998, and it challenged the entire automotive industry.

A few days after the announcement, Renault's executive committee held a meeting. Chairman Louis Schweitzer mentioned that Renault should also start thinking about potential mergers and partnerships. At the time, the company was showing some revenue growth, but it didn't compare to the growth of the new company formed by Daimler and Chrysler, which became as large as General Motors and Ford Motor virtually overnight. We understood the strategic challenge: Could Renault stay relevant among such mammoths?

The question then became not whether we should form a partnership, but with whom. We knew that automakers who delivered sales of fewer than 4 million units wouldn't be around much longer, so that disqualified any smaller candidates. On the other hand, the then-largest automakers, such as GM and Ford, were out of reach.

After extensive deliberations, we narrowed our list down to three candidates: Mitsubishi Motors, Nissan and a South Korean automaker. At the time, neither Mitsubishi nor the South Korean company seemed like the right fit (thought 17 years later, we entered a partnership with Mitsubishi Motors). Nissan, however, seemed like it could be a good match. It had the size and international brand recognition. And I had a good impression of the company.

Nissan had the incentive to partner. In the decade leading up to that point, Nissan had experienced only one profitable year. Its president at the time, Yoshikazu Hanawa, was publicly looking for a partner, though he initially had bigger companies than Renault in his sights, notably DaimlerChrysler. Renault was next in line to enter discussions with Nissan.

We didn't know what the others were offering. But unlike Daimler, which was negotiating with several other companies at the same time, Renault's interests were focused solely on Nissan. The negotiations went well, but it was clear to us that Renault wasn't Nissan's first choice. Our fate depended on whether Daimler was going to take Nissan's deal or not. But we kept at it, and in March 1999, Daimler's chairman, Jurgen Schrempp, left Tokyo and the Nissan deal behind.

A colleague informed me of Daimler's exit while we were attending the Geneva Motor Show. Now we were the only player in the game. I was not directly involved with the negotiations; Schweitzer had instructed me to provide assistance in case of an emergency, so I was offering support from the sidelines. But in November 1998, I was called in to pinch-hit: Schweitzer asked me to provide Nissan's executives with details about our 20 Billion Franc Cost-Reduction plan. I delivered a three-hour presentation to Hanawa-san and six other executives. It was apparently effective, because Hanawa-san later told me, "I was going to request that you be the one to come if we ever entered a partnership with Renault, Ghosn-san."

Because Renault is owned in part by the French government, it took some time to get the deal approved. Members of the government were supportive of it, but there was some hesitance after a failed Volvo deal from years earlier. Schweitzer assured Prime Minister Lionel Jospin that such failures wouldn't be repeated. The prime minister gave his approval.

When the deal was finalized, Schweitzer told me, "There's only one clear candidate to go to Nissan: you." Indeed, I had the necessary qualifications. I had experience working with different cultures and also with restructuring businesses. Schweitzer would later tell me that if I had refused, he would have terminated the Nissan partnership. But it didn't take much to convince me -- this was the opportunity I had been working toward. While I had my heart set on going, the ultimate decision would be up to my family; we had just returned to France not two years before. Fortunately, they were game for a new adventure. We packed for Japan.

Carlos Ghosn is chairman and CEO of Nissan Motor Co., Ltd.

Read more installments of My Personal History: Carlos Ghosn

 

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