Commentary / Japan

Nissan finally breaks with the Ghosn era

by Chris Bryant

Bloomberg

The resignation of Hiroto Saikawa, chief executive of Nissan Motor Co. gives the embattled Japanese carmaker a much needed opportunity to clean decks and move on.

Ever since the shock arrest of the company’s chairman Carlos Ghosn almost a year ago, the Japanese auto giant has been in permanent crisis mode and ties with its French alliance partner Renault SA have frayed. To steer it through that period Nissan needed a leader with deft political skills who embodied a clean break with the Ghosn era. Saikawa — a Ghosn appointee — wasn’t it.

The report that Nissan published concurrently on Monday, detailing allegations of financial misconduct by Ghosn, makes for grim reading (Ghosn denies wrongdoing). Yet Saikawa could never distance himself fully from an era during which Nissan paid lip service to principles of good corporate governance.

Revelations that Saikawa too was overpaid improperly were an unacceptable reminder of the allegations that led to Ghosn’s downfall, even if the amounts were smaller and Saikawa says he was unaware of the payments. He isn’t accused of misconduct.

That the Nissan CEO seemed to revel in Ghosn’s ousting — so much that it sparked charges of a palace coup — made it much harder to restore a basis of trust with Renault. In fairness, Renault didn’t help by pushing subsequently for a full-blown merger with Nissan that was unwanted by the Japanese, and then secretly discussed a tie-up with Italy’s Fiat Chrysler Automobiles NV.

Meanwhile, Nissan’s recent financial performance under Saikawa has been nothing short of disastrous. Profit is in free fall, the company has lost ground in the vital U.S. market and it has been forced to slash production and jobs.

His departure will spark hopes that Nissan can finally mend ties with Renault and do something about the destruction of shareholder value at both companies in recent months. In time perhaps the French side will be able to revive merger talks with Fiat; that deal has strategic and financial merit even if it remains dicey politically. Renault agreeing to cut its 43 percent Nissan stake might be a good place to start. Nissan holds only 15 percent of Renault, an imbalance that has fueled the tensions between them.

First things first, though. Saikawa’s successor, whose identity Renault will have a say in, must put Nissan’s own house in order. That’s a sentiment Renault chairman Jean-Dominique Senard appears to share.

At a time of unprecedented upheaval in the car industry, Nissan can’t afford to be distracted by in-house politics. If change at the top lets executives focus on the business of making and selling cars, so much the better.

Chris Bryant is a Bloomberg Opinion columnist covering industrial companies.

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