The global auto alliance, comprised of Nissan, Renault, and Mitsubishi, have announced that they will be overhauling their international partnership structure in a strategy to move past the Carlos Ghosn scandal that has so far been plaguing them. With Ghosn now out on bail, the alliance has decided to make drastic changes within the partnership to move past the issue.
The recent arrest of Ghosn due to alleged financial misconduct has had an adverse effect on the companies, which was mainly due to lost investor confidence. Ghosn is currently facing charges involving the alleged understatement of his income from Nissan and of illegally transferring investment losses. If he is found guilty, Ghosn could be facing jail time of up to 15 years.
In a statement made at Nissan's headquarters in Japan, the alliance announced that they will be forming a new four-member board of directors to oversee the entire international organization. The new board will include the current chief executive officers of the three carmakers plus the current chairman of Renault, Jean-Dominique Senard. The alliance was previously under the majority control of Ghosn and his lieutenants, who were instrumental in forming the partnership.
The alliance explained to reporters that the new structure will allow the leaders of each company to work together more closely and more efficiently. According to the alliance, the leadership structure will also allow faster responses to different challenges in the industry such as changing demands and the recent trend towards electrified vehicles.
The partnership of the three auto manufacturers has so far worked in their respective favors given their equal stakes in each other's technologies and manufacturing facilities. Analysts have estimated that the three companies were able to save as much as US$5.7 billion in annual costs because of the partnership. Pooling together their resources, the companies were able to cut cost on redundant processes and assets.
Despite the apparent financial benefits, the partnership has had its own set of drawbacks. One of the main issues with the alliance has been their complicated ownership structure. Despite selling more cars than Renault, Nissan currently only has a minority voting stake when compared to the French manufacturer.
Nissan executives previously also had an issue with Ghosn's plans to further integrate the Japanese company with Renault. Some Nissan executives were apparently worried that Renault could soon take full control of the Japanese company. As of the moment, Nissan's chairman position still remains vacant. Renault had stated that it does not intend to place one of its own executives in the position; a move that has been seen by some as a way to ease the Nissan executive's fear of a possible takeover.
