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With Carlos Ghosn in the rearview mirror, Nissan looks forward in fast-changing automobile world

by Junko Horiuchi

Kyodo

Carlos Ghosn’s ouster as chairman of Nissan Motor Co. signals that the automaker is seeking to reshape itself to better deal with a rapidly changing market environment, breaking from nearly two decades under his charismatic leadership style, according to some analysts.

Chasing volume and sharing costs were a large part of Ghosn’s business strategy for one of the world’s most successful auto partnerships — the alliance between Nissan, Renault SA and Mitsubishi Motors Corp. — led by the Brazil-born executive.

Nissan officials say they intend to maintain the alliance due to its benefits, even as the company’s board on Thursday approved the dismissal of Ghosn as chairman following his arrest for alleged financial misconduct.

Ghosn, sent in by Renault in 1999, closed plants, cut thousands of jobs and streamlined its supply chain to pull the automaker back from the brink of bankruptcy.

He set lofty numerical targets to propel growth at Nissan, and as a result, the Japanese-French alliance he forged in pursuit of greater economies of scale grew into one of the world’s biggest auto groups.

But there is no guarantee that this approach will remain a growth driver at a critical time when the auto industry faces dramatic changes in technology and consumer demand, the analysts say.

Pursuing scale and limiting costs through partnerships remains vital, but a powerful management chief alone can no longer oversee increasingly diversified operations that can involve everything from traditional car manufacturing to developing advanced wireless and artificial intelligence technologies and offering services using autonomous vehicles, they say.

Volkswagen AG, Toyota Motor Corp. and other global carmakers are stepping up efforts and investment to introduce next-generation vehicles with much focus on self-driving cars, vehicles connected to the internet and those powered by electricity. Competition is intensifying with newcomers like Uber Technologies Inc., Alphabet Inc.’s Google and Tesla Inc.

With these advanced technologies in the pipeline and customers increasingly viewing cars as something to share rather than to own, automakers are also addressing growing demand for ride-sharing and hailing services.

Ghosn’s management style was “very effective in an era when carmakers just concentrated on building factories and cars and selling them through dealers,” said Satoshi Nagashima, Japan managing partner at consulting firm Roland Berger.

“With the departure of Ghosn, who had so much power concentrated in his hands, Nissan could shift direction to focus more on providing services that cater to different local consumers’ preferences in each country and region.”

Nissan is being left behind leading automakers in car-sharing and self-driving operations, Nagashima added.

Nissan CEO Hiroto Saikawa bluntly criticized Ghosn’s long reign and the concentration of power in his hands after he added the role of Renault’s CEO in 2005. Renault holds a 43.4 percent stake in Nissan, which in turn owns a 15 percent stake in the French company but with no voting rights.

“There was excessive power concentrated in one person,” Saikawa said at a news conference at Nissan’s headquarters in Yokohama on Monday.

As Nissan moves forward without its longtime leader, the company will work on bolstering its governance under a new management team and rebuilding its tarnished brand image.

“The Ghosn misconduct scandal revealed a serious problem with Nissan’s corporate governance,” said Soichiro Nagai, lead rating analyst at Rating and Investment Information.

Nissan may feel the impact of the arrests of Ghosn and Kelly on sales, which have recently taken a hit from a scandal over improper final vehicle inspections at plants in Japan, Nagai said.

“We need to see whether appropriate measures will be taken to rebuild governance and strengthen monitoring functions,” he said.