Nissan’s New CEO to Take Closer Look at Ties With Renault

The Nissan Motor Co. logo sits on display on day two of the 89th Geneva International Motor Show in Geneva, Switzerland, on Wednesday, March 6, 2019. The show near Lake Leman, which opens to the public from March 7 to 17, will be the first gilded showcase of the year for the likes of Bugatti, Koenigsegg, Lamborghini, and Pininfarina, among others. Photographer: Chris J. Ratcliffe/Bloomberg

(Bloomberg) –Nissan Motor Co.’s new chief executive officer said he is looking at what works and what doesn’t in the alliance with Renault SA and Mitsubishi Motors Corp., stressing that the partnership needs to benefit all parties.

Makoto Uchida, appointed after a year of turmoil following the arrest of Carlos Ghosn, said in his first media conference on Monday that changes are needed in the pact to benefit the companies’ sales and earnings. He said discussions about changes in capital ties haven’t taken place.

Read: How Carlos Ghosn Hid $140 Million in Compensation From Nissan

“The alliance is critical to reach our goals,” Uchida said at Nissan’s headquarters in Yokohama. “We need to look at what worked within the alliance, and what didn’t, and decide how to go forward.”

Uchida faces monumental challenges at Nissan, which has seen turmoil at the top since former Chairman Ghosn’s arrest while profits plumb decade lows. The automaker needs to get its business in order fast, with autonomous vehicles and electrification poised to disrupt the industry in a once-in-a-generation shift.

Ghosn led Nissan and Renault for years and held their two-decade partnership together until his arrest in November 2018 on allegations of financial misconduct, which he has denied. His downfall exposed governance shortfalls at Nissan and brought long-standing tensions between the automakers to the fore.

Ownership Problem

Uchida said the companies haven’t held discussions on changing the capital structure in the partnership, which has been at the heart of the tensions. A lopsided arrangement has given Renault more say, even as Nissan had outpaced the French partner in earnings in recent years. Renault owns 43% of Nissan with voting rights, while Nissan has a 15% stake in Renault, stripped of votes. Nissan also has a stake in Mitsubishi Motors, which Ghosn brought to the alliance in 2016.

Read: Renault-Nissan Ties Get Even Shakier

Relations were further strained under Uchida’s predecessor, Hiroto Saikawa, when Nissan’s failure to back Renault’s plan to merge with Fiat Chrysler Automobiles NV effectively scuttled the transaction. Fiat Chrysler has since agreed to merge with Peugeot maker PSA Group instead.

Nissan overhauled its top management a month ago, adopting a collective-style leadership aimed at moving past the outsized influence that Ghosn was seen to have had over Nissan and its alliance with Renault. Ashwani Gupta was appointed chief operating officer, and Jun Seki as deputy COO.

The alliance partners also chose Hadi Zablit as the new secretary general of the entity, according to people familiar with the matter. Zablit, currently its head of business development, is an engineer by background and has worked for Renault for years.

Uchida said that one of the first things the new management will look into is how the alliance can immediately benefit the parties, noting that Renault’s profitability is also under pressure.

“We want to move forward with our relationship with Renault, while preserving our independence,” Uchida, wearing a dark grey suit and solid blue necktie, said on stage, flanked by Nissan’s Fairlady 240Z sports car from the 70s and a SUV prototype. “In order to have an alliance it needs to be beneficial for all parties. Specifically, this means have a structure that leads to growth in sales and profitability.”

–With assistance from Ania Nussbaum.