Thursday , February 25 2021

we explain why this is described as a "coup d'état" by Nissan



The group's CEO, the leader of the alliance between French Renault and Japanese Nissan since 1999, is suspected of having hidden the Japanese tax for half of his income for several years. A scandal that could make Nissan's business.

Road exit for Nissan savior. The CEO of the Renault group, who took over the Japanese company at the brink of bankruptcy in 1999, was arrested on Monday, November 19 in Japan for tax evasion charges. Carlos Ghosn is suspected of having hidden half of his income for several years.

These revelations are timely, according to several industry experts, who see a "coup" orchestrated by Nissan. The flagship of the Japanese industry, which now weighs more than its French partner, was afraid of an enhanced integration that would have lost its independence.

How was the alliance between Renault and Nissan created?

The alliance between the French and Japanese groups is back in 1999. Nissan is on the brink of bankruptcy. Many companies are in the class to steal the help of one of the jewels of the Japanese industry, but only Renault has the kidneys strong enough, thanks to the involvement of the French state. The man of the situation is called Carlos Ghosn. This former Michelin, nicknamed it "the cost killer" (cost killer, in English) reaches Nissan with about fifteen French executives and proceeds without treason to a spectacular recovery. "They are the first 21,000 workers at the door, reminds franceinfo David Barroux, a journalist daily Echoes. Then the closure of an industrial area, and the rupture of relationships with historical suppliers from the game of competition. " This alliance is based on a specific arrangement, with the cross-participation of the two companies. Renault owns 43.4% of the Nissan capital and the Japanese own 15% of the French.

"The alliance is not a marriage, rather a sympathy based on mutual respect, with two great founding principles, explains Christian Mardrus, spokesman for the chairman of the Alliance, at the new plant. We are and remain two independent companies. Everything we do should be for the benefit of both companies. " To manage this alliance, a Dutch company, equally owned by the two teams, was born in 2003: Renault-Nissan. This is what directs in reality the approach between the two manufacturers, details The world. "It's a merger-free takeover"says Frédéric Fréry, Strategy Professor at ESCP Europe, for franceinfo.

Carlos Ghosn incorporated this alliance, based on it.Frédéric Fréry, Strategic Professor at ESCP Europein franceinfo

This maneuver has a double goal, according to the specialist: to maintain the independence of the Japanese, without channeling to Renault, and to strengthen the role of Carlos Ghosn, "fundamental connection" of this alliance.

How are the two companies doing since the beginning of this alliance?

Thanks to the serious restructuring under the auspices of Carlos Ghosn, Nissan is reborn from the ashes. Three years after the alliance between the two companies, the results are already noticeable, ahead The worldSince the team has a profit. This recovery is greeted in Japan, where Carlos Ghosn is respected until he becomes a manga hero, details Le Figaro. "In fact he managed to put the builder back on track, and in Japan, nobody finally forgot what he was doing as Nissan's boss. (…) His authority, his legality, has never been challenged "says CEO of the Cetelem Automobile Observatory, Flavien Neuvy, in France.

Strong for its success, the alliance expands. Takes control of the Russian Avtovaz team in 2013. In October 2016, Nissan officially acquires 34 percent of Japan's Mitsubishi Motors competitor, reports Le Figaro. In 2017, the Renault-Nissan-Mitsubishi alliance became the world's largest automaker, with more than 10.5 million vehicles sold worldwide only last year. It has 470,000 employees and 122 plants on all continents.

But the balance of power has been reversed. In 1999, at the time of the merger, Renault has a better health than that of Japan. Nearly twenty years later, Nissan has nearly 100 billion revenue and weighs nearly twice as much as Renault (58 billion), recalls release.

The problem is that Nissan is bigger, more profitable and has a better look than Renault, from a Japanese point of view anyway. They include a high tech industry or a market in the United States.Frédéric Fréry, Strategic Professor at ESCP Europein franceinfo

At the time of the crisis in the late 2000s, Nissan's results allowed the diamond company to keep its head out of the water. In 2017, Nissan sold 5.8 million vehicles, compared with 3.7 million for Renault and a little over 1 million for Mitsubishi, he says release.

When did the first tensions begin to appear?

After years of silent admission, the tension climbs sharply on the Nissan side in 2015, following a temporary rise of the French state to the Renault capital. "The French state now has more weight, from Renault's point of view it is a big problem and for us Nissan is a cause for concern", says Nissan's head of competitiveness at the presentation conference of the six-month results. The Japanese team suggests, in vain, "a rebalancing" of its alliance with Renault, from 15% to 25% of the French construction company's shares.

And Carlos Ghosn may have saved a jewel of the Japanese industry, he "remains a stranger", says Frederic Frery. His hand in the alliance is annoying. "There is a strong and even violent political dimension for him: he has systematically exterminated his 2 figures, including the Japanese side, has always ensured that he can not succeed"the economist added. Japanese workers are bothered to see the technologies, the production of some vehicles (such as the small Micra sedan manufactured in France) and part of the profits recovered by Renault. And as reported on Tuesday economic day Nikkei, "excessive compensation" Carlos Guun has fired "Growing Review". In 2016, he received a total remuneration of 15.6 million euros, making him the third highest paid head of the CAC 40 leaders.

Resentment has been highlighted in recent months with the emergence of rumors in the spring of a twin concentration, which the Japanese press repeated. Carlos Ghosn worked to make the links "Irreversible" between Renault and Nissan, according to a note by Kentaro Harada, SMBC analyst Nikko Securities. "The idea was to reap the benefits of synergies, with more willingness to integrate, common technologies, shared management", explains Frédéric Fréry. Enough to upset the Japanese, impatient to maintain their independence and strength. "Nissan Wishes for Independence"Huffington Post, Christopher Richter, a car analyst at the CLSA Mediation Company, confirms.

What does Nissan say to Carlos Ghosn?

The Japanese company announced with conviction that it had conducted an internal investigation for Carlos Ghosn and another group manager, Greg Kelly. He informed of the inappropriate practices of the two leaders, wanted to shed light on the suspicions of concealing part of their income. "The survey showed that over the years, Ghosn and Kelly reported wages below the actual figures in Tokyo Stock Exchanges to reduce the reported amount of Carlos Ghosn's fee", says the Japanese automaker. The Tokyo Prosecutor's Office says fraud has spread "between June 2011 and June 2015", during which Carlos Ghosn conspired "to minimize punishment five times". He is reported to have reported less than half of his income.

Nissan's management is talking about 4.9 billion yen (38 million euros) instead of 10 billion euros (78 million euros). This concealment is not the only complaint of the 64-year-old Franco-Livan-Brazil. At a press conference held on Monday night, Nissan's executive president also reported "many other unfair practices, including the use of corporate ownership for personal purposes". The Japanese court accuses Carlos Ghosn of having diverted his Nissan personal interest. Thus, it would remain free of charge for the housing purchased by a Dutch subsidiary of the company, says the Nikkei Asia Review Japanese site. This subsidiary would have "bought for $ 17.8 million (15.6 million euros) of real estate in two cities" where Carlos Ghosn, Rio de Janeiro (Brazil) and Beirut (Lebanon) lived. It would have benefited from it without any economic justification.

Revelation that reflects the observations of employees sent to the press. "It's greedy, in the end it's just a matter of money", launches a Nissan director in the daily newspaper Yomiuri. "He asked his subordinates to meet difficult goals, but he still received a high salary even when Nissan's business was not going well", says the newspaper. And a former confidential Japanese, quoting Bloomberg, concludes: "Carlos Ghosn was a dark boss with too much force and not enough vision".

Who benefits from the fall of Carlos Ghosn?

According to some industry analysts, the fall of Carlos Ghosn is so impressive that he could hide a "coup" of the Japanese team. For Nobutaka Kazama, a professor at Tokyo's Meiji University, the release of data on the French boss "could be planned in the hope of rejecting integration into the Renault initiative". Without being affirmative, French deputy Jean-Christophe Lagarde is also challenging this case by asking the government to take care of Renault's positions. "I hope Carlos Ghosn's arrest is not a maneuver from Japan to organize a divorce between Renault and Nissan", writes the head of the UDI. An analysis that is not very much shared by Frédéric Fréry.

We could do an episode of the Throne game.Frédéric Fréry, Strategic Professor at ESCP Europein franceinfo

For the one who announced the capture of Carlos Ghosn is no other than number 2 of the alliance, Hiroto Saikawa, CEO of Nissan. In his statement, he himself "Slaughtered" Carlos Ghosn, estimates economist Frédéric Fréry. Hiroto Saikawa has rewritten his story "describing the recovery as a result of the work of a large group of people", not the only charismatic chief executive of Renault, says Christopher Richter. He has it "specialized brain of combinations". "Hiroto Saikawa knows very well that Carlos Ghosn eliminates his numbers 2. Has he taken the lead?" Frédéric Fréry, stressing that the French may, this time, "fell to the worst than him"."Hiroto Saikawa obviously uses accusations against Carlos Ghosn to increase his weight at Nissan and to mark the footprint of the company", says Hans Greimel, an Automotive News expert based in Japan.

Is the alliance between the two groups compromise?

The fall of Carlos Ghosn overwhelms a succession that has already been "Switched"says Flavien Neuvy from Cetelem Automobile Observatory in franceinfo. At Nissan, business administration was in the hands of Hiroto Saikawa from April 2017. Renault, Thierry Bolloré was appointed deputy chief executive in the spring of 2018. But the departure of one who personified the alliance between Renault, Nissan and Mitsubishi would be put everything back flat? The team should in all cases find a successor: "They will not dare to put a Frenchman, The analysis by Frédéric Fréry, and it will be very difficult to install someone from Renault. "

The alliance should also reassure the financial markets since Carlos Ghosn's announcement of the arrest, the stock price collapsed. In Tokyo, Tuesday ended 5.45% for Nissan and 6.84% for Mitsubishi (MMC). In Paris, Renault lost 1.42% shortly after opening, having already unscrewed 8.43% on Monday. "We can not rule out the possibility of weakening the alliance", says Japanese analyst Kentaro Harada.

It will change this balance of power (between the French and Japanese parties), that is the main question.Kentaro Harada, Japanese analystin AFP

Meanwhile, the French state will be very careful in the future of Renault, an emblematic company of which holds 15% of the capital. Economy Minister Bruno Mayor said on Monday "the first concern" of France, after Carlos Ghosn was arrested, was "stability" Renault and "consolidating the alliance" between the French carmaker and its Nissan partner. "We will therefore make every effort to be a shareholder represented in the Renault Board to ensure Renault's operational continuity and the stability of Renault's governance."he added at a press conference in Brussels.

Will the Japanese manufacturer have the opportunity to try to get the wheel of the alliance with Renault or not regain some of its independence? "Renault still owns Nissan at 43% lighting Frédéric Fréry, I do not think the goal is to defeat the alliance, but we are more likely to balance power within the alliance for Nissan. "


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