Story taken from Wheels January 2007 issue. For more from this issue, click here.
It's Carlos Ghosn himself who opens the door of the spacious suite in Cologne’s Hyatt Regency Hotel. The first surprise is that Ghosn, whom I’d imagined as short, squat and nuggety – the image of Jac Nasser, whom he counts as a friend – is fit, trim, and matches my own 174cm height. He’s in an open business shirt and a black jacket with a Nissan lapel pin. I wonder idly if the pin is double-ended, with a Renault diamond for other occasions. The second surprise is that he's gracious and welcoming.
It shouldn’t be – in 2001, the father of four was named Japan’s ‘Father of the Year’, and in 2005 he was voted second in a list of the country’s most desirable husbands – but Ghosn’s sharp, almond-shaped eyes somehow imply an intensity that borders on anger.
He is certainly not a man to shirk tough decisions. In announcing his Nissan turnaround plan in 1999, Ghosn coolly laid out the closure of four manufacturing plants and the loss of 21,000 jobs. He also pledged that if the company failed to post a profit the very next financial year, he and his executive committee would resign. Overnight he went from pariah to wartime prime minister. His five-year targets were met within four.
By 2006, the Renault-Nissan alliance was the world’s fifth-largest vehicle producer, just 75,000 units behind fourth-placed Volkswagen. In his rocket-like rise to prominence and power in the global car industry, Ghosn became known as a visionary with a deft talent for distilling the big picture. He is, at the same time, perhaps the most hands-on head of any major car company.
Ghosn had flown into Cologne from Tokyo at 5:30 this morning, for the Nürburgring preview of the Nissan GT-R (see page 52). Exactly two weeks earlier he’d been down the road in Frankfurt, unveiling a new Renault Kangoo, a coupe concept of the new Laguna sedan, and a pair of variants of the Romanian-built Renault/Dacia Logan.
Clearly, Ghosn moves comfortably between cultures. Born into a Lebanese merchant family in Brazil, he was something of a maths prodigy and moved to Paris in his late teens to study engineering. He stepped straight into an 18-year rocket-ride with Michelin, running factories and reviving flagging operations in France, then Brazil, and from 1990, its entire American operations.
His career in the family-owned company had a rubber ceiling as Edouard Michelin, who worked under Ghosn in America, was destined for the top job. (Which he was given, in 1999, only to die in a 2006 boating accident). With a reputation as a turnaround titan, Ghosn was tapped by Renault CEO Louis Schweitzer in 1996 to be his second-in-command.
Ghosn can communicate in six languages, having recently added Japanese to his French, English, Portuguese, Spanish and Italian. His experience in adapting to new cultures, he says, has been a distinct asset in his career.
It may also help explain why he’s running the only one of the recent automotive mega-mergers that’s still together. “The others have exploded already!” he says, raising those hawkish eyebrows. So, what’s the secret, after bringing two car makers together with precocious success, to keeping them together?
“Common sense,” he says simply. “From the beginning, we did not try to meld cultures that we knew would never meld. This alliance is based on [two] very simple principles. The first one is autonomy for each company – clear distinction of corporate identities; clear distinction of brand identities.
“The second rule is synergy development. In every single synergy we develop there is always something for Nissan and always something for Renault. They may not be the same, but it’s always positive for both sides.”
“All of this,” Ghosn continues, “[is] done in a systematic way, without ever expecting that the Japanese executive is going to behave like the French executive, or the French executive is going to behave like the Japanese executive … but [each] considering the other not as a competitor, but as a partner.”
A more mercenary explanation is that each company has a vested interest in the other’s performance. Renault holds 44 percent of Nissan, which in turn holds 15 percent of Renault. As such, Nissan is Renault’s equal-largest shareholder alongside the French government, though the recent European Court ruling on Germany’s protectionist ‘Volkswagen law’ may soon pressure the government to sell.
Ghosn does not underestimate the motivating influence of his companies’ cross-shareholding: “This, in my opinion, is the main reason for which this alliance is still developing very well.”
I note that his description of the more emotional aspects of the alliance sound more like the words of a marriage counsellor. He laughs openly: “Yeah, you can find a lot of similarities in a couple. If you’re lucky.”
Ghosn’s wife and the younger two of their four children moved from Tokyo to Paris in 2006, shortly after Ghosn took the Renault reins. How does he physically run a life, and two companies, between different countries?
He grins broadly. “Well, based on the statistics that I got from my assistant, in 2007 – it is already completely booked – I will have spent 42 percent of my time in Paris, 40 percent of my time in Japan, and the 18 percent remaining between the US, the Middle East, Brazil, China, etcetera,” he explains. “But every month I am in Paris, and in Tokyo.”
Ghosn’s hands-on style is legendary in corporate circles, but there’s a simple trick to it. What one might see as an impossible level of micro-management in a corporation of more than 300,000 people, is actually a process Ghosn calls “selective feedback.”
“I don’t like big meetings, because [in] big meetings, people get very political, you know? You never know if they’re talking to you or if it’s someone else on the table and you don’t know who it is. So I prefer one-on-one.
“Obviously, I talk to dealer bodies … [but] I prefer to select some dealers, go spend half a day with them, and say, ‘Tell me about your business; are you successful, are you profitable, why, [or] why not?’ … you learn much more. He’s gonna tell you about all these problems… And then you can correct [them].”
And the car makers that worry him most are Renault and Nissan. “Oh, a car manufacturer of our size, the main fear is itself,” he says, when asked about rivals.
“If you start to compromise yourself, that’s your biggest danger … when you start to avoid problems, or making compromises, half-solutions.”
And there are problems. Nissan, which, in 2006, built almost one million more vehicles than Renault (3.238m vs 2.346m) and accounted for two-thirds of the latter’s earnings, posted declining profits for each of the first three quarters of 2007.
Renault, meanwhile, has two years to try and meet the ambitious, 3.3-million annual sales target stated in Ghosn’s ‘Commitment 2009’ plan. In 2006, the first year of the plan, Renault’s sales actually fell by 100,000.
Ghosn responds by pointing out that the plan’s other objectives are well underway. He’s confident that Renault’s just-launched Laguna and the 2008 Megane will be among the top-three European brands for quality, and give sales a big push. “For Renault, the big year will be 2008,” he promises.
For a snapshot of Ghosn’s global juggling act, one need only look at some of the issues he’s had on the boil in 2007. At the Frankfurt show in September he announced the goal of having over 40 percent of Renault’s sales occurring outside of Europe. Meanwhile, he is launching Nissan’s US-built Infiniti models into Europe. At the same time, Ghosn dreams of having a US partner to expand his company’s efficiencies and coverage in America. And, er, concurrently, he has absolutely no interest in a Renault return to the US.
“The priority is not to go and fight in the mature market, it is to make sure you are in the race in the developing market,” he says. “In 1999, when the alliance was signed, 54 million cars were sold in the world … 40 million between the US, western Europe and Japan, and 14 million in other countries. In 2006, 65 million cars were sold around the world … 40 million – same amount – in the US, western Europe and Japan.
“So, all the growth took place outside … China leads the pack, [with] Russia, Indonesia, the Middle East, booming. If you are a business person, where do you go?”
Ghosn has twice been to Australia, and while he’s very pleased with Nissan’s performance, he is not satisfied: “My only wish is to make Renault another significant contributor in Australia, which is not the case today, but we’re going to get there.”
Just listening to Ghosn’s observations, you want to go wherever he’s going. On Infiniti: “Young people, who are becoming wealthier, they don’t want to buy the same car as their dad. It’s an opportunity for the growing brands to develop themselves.”
On the runaway success of the Dacia/Renault Logan in developing markets: “In these countries, they don’t care about small cars. They care about low-cost cars … A low-cost car is the biggest car possible, at the minimum price possible. Logan … [is] a US$5000 car, but you can put five people inside, it has a very big trunk, and it’s very robust. That’s what developing countries want.”
On what young people want: “When you do a car for young people, young people don’t buy it – older people buy it. You know the PT Cruiser? Average age [of the buyer] is 60. Young people want a car for adults. They don’t want toys.”
On hybrid hubris: “When you look at hybrid sales in the US, the Prius is very successful, but the hybrids of normal cars are not so successful. Which means people are interested in hybrids just to say, ‘I am in a hybrid.’”
One of just a few men with his hands on the wheel of our automotive future, Ghosn is anything but pessimistic about it. And he figures – hell, he must know – that the car is about to evolve as never before.
“I think, in 10 years down the road, the car will change a lot,” he says, visibly excited. “Engines and transmissions will change, and all the technologies that we are developing today – electric cars, fuel cells, hybrid, clean diesels, different kinds of combustion engines – will be on the market. And each one of them will have a different use.
“For example, I have no doubt that we’re gonna see more and more electric cars in cities. Because in cities, what’s important is not a 20 percent [reduction] in emissions – it’s zero emissions. That’s what people want.
“This mixture of technologies … is [also] a function of the country, because the regulation in each country can influence the technology. In Europe today, 60 percent of the cars sold are diesel. In the US, zero percent. In Japan, zero percent. Why? The regulations. So we have to be careful not to bet everything on the one particular technology.”
“You’re going to have the development of X-by-wire, which will completely change the interior of the car. Communications inside the car, access to internet … and you’re going to see it going everywhere – down into the lowest $3000 car. The car of 10 years’ time will have nothing to do with the car of today.”
What many – perhaps most – of these cars will have in common, though, along with the people who build them, is that they’ll be powered by Carlos Ghosn.