Arrest of Carlos Ghosn; Earthquake in Renault, Nissan, and Mitsubishi

With the arrest of Carlos Ghosn, the head of the Renault-Nissan-Mitsubishi alliance, this automotive group, which was on its way to becoming the largest car manufacturer in the world, is facing a new challenge. Carlos Ghosn was interrogated and subsequently arrested by prosecutors upon his arrival in Japan. According to Japanese media, the investigation into this influential automotive executive was initiated by Nissan employees. Financial misconduct over more than five years and lack of transparency regarding his income are part of the allegations against him. He is also accused of misusing company assets for personal gain. It is reported that he failed to report about $44 million of his income since 2011. Hiroto Saikawa, the CEO of Nissan, apologized for seven minutes at the beginning of his press conference announcing this matter and then stated, "In addition to expressing regret, I feel a strong sense of disgust. We will try to minimize the negative impacts of this incident on the company's operations and our business partners." Mitsubishi also intends to remove Ghosn from his position as chairman of the company. Nissan plans to do the same. Ghosn; Lebanon, Brazil, France, Japan Carlos Ghosn was born in 1954 in Brazil; his grandfather moved from Lebanon to Brazil in his teenage years, but Carlos returned with his family to Lebanon during his childhood. He then went to France for his studies and obtained his engineering degree from the École Polytechnique in Paris. After finishing his studies, he started working at Michelin and eventually became the company's North American CEO in 1990. He later joined Renault and advanced through the company's management hierarchy. In 1999, Nissan faced significant financial difficulties, and Renault, in a move with potential risk of loss, purchased 44% of the company's shares and sent Carlos Ghosn as one of its most successful managers to revive Nissan. The Japanese work culture is not very compatible with foreigners in their industries, which is why he initially faced many challenges at Nissan. Nevertheless, he undertook extensive reforms at Nissan, closing many production lines and laying off a large number of Nissan employees. Ultimately, Nissan became profitable, and its profitability also brought Renault, which was not in a good position at that time, back to its peak. During this time, the two companies planned a platform-sharing and market-sharing alliance. Many Nissan vehicles from that year onward used Renault parts, and many Renault vehicles also utilized Nissan engines and transmissions. This method reduces research costs, transfers Nissan's quality spirit to Renault, and enables Renault to produce higher-quality vehicles compared to its competitors in France. Ultimately, in 2005, Carlos Ghosn became the CEO of Renault while retaining his position as CEO of Nissan. Through his initiatives, in addition to Renault, the Romanian company Dacia, South Korea's Samsung Motors, and Russia's AvtoVAZ, which had a significant portion of their shares purchased by Renault, were also revived and became profitable. However, Ghosn aimed to elevate the Renault-Nissan group to the position of the largest car manufacturer in the world. To this end, he formed a new alliance by adding Mitsubishi, which was not in a good state, to the Renault-Nissan group, creating the Renault-Nissan-Mitsubishi alliance. After this alliance, he became the CEO of Renault and chairman of Nissan and Mitsubishi. In the past two years, Carlos Ghosn had been pursuing a similar platform program among the three automakers and wanted to share design and research costs among the three companies, thereby transforming the products of all three automakers once again. However, his arrest may serve as a brake on a Franco-Japanese dream. In the first six months of this year, the Renault-Nissan-Mitsubishi alliance managed to sell 5,540,000 vehicles, earning the title of the largest car manufacturer in the world. Currently, Renault holds 44% of Nissan's shares, and the leadership of the Renault-Nissan-Mitsubishi group is under Renault. With Carlos Ghosn's removal from Nissan and Mitsubishi, this automotive group, which had managed to come close to becoming the largest car manufacturer in the world, is facing a managerial earthquake and a serious challenge ahead.