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<< News >>

Local News / Automotive

Friday, 17 November, 2006 7:42 PM

Carlos Ghosn expressed "We don't think the time is right"

PHOTO BY JASON RZUCIDLO / AMERICAJR.com

Carlos Ghosn, the President & CEO of Nissan and Renault speaks to reporters in a press conference following his speech.
by Jason Rzucidlo
americajr@americajr.com

Carlos Ghosn came to the Motor City to speak to members of the Detroit Economic Club. The CEO and President of both Nissan and Renault said that his companies are not looking for a third partner. Ghosn spoke yesterday to over 1,200 people inside downtown Detroit's Cobo Center.

This was his first appearance in Detroit since the talks between GM and Nissan-Renault were cut off. Those discussions ended without an alliance. GM thought Nissan-Renault was getting a better part of the deal. Ghosn told the members of the economic club that his shareholders thought it was not in their best interest to merge with the American automaker.

Ghosn came to the Motor City to explain how the alliance between his two companies are a unique and prosperous business model. He said, "For Nissan and Renault, you can think of the Alliance as a fundamental document, like a constitution, that exists to formalize the management structure and governs the relationship between the two companies."

He said the alliance is not a takeover by one of the companies. Ghosn explained, "In fact, you cannot merge two brands any more than you could "merge" oil and water. The Alliance is a structured, disclipined partnership."

Ghosn went on to explain that neither company is in control of another. Both are working together simultaneously. Nissan and Renault have their own executive board, business plan and strategy. Their brand identities have remained separate. Shareholders own stock in both companies to seal the bond between them.

In March 1999, Renault obtained 36% of Nissan shares. Later, it received 44% of shares from Nissan. When Nissan became more profitable, it acquired 15% of shares from Renault. The value of each company is tied together essentially. If one does well, they will both benefit. If one loses money, they will both be affected.

Ghosn outlined the three main goals for the Alliance, "Respect and preserve the brand, product and corporate identities of each member; Accept and maintain autonomous management structures; and seek and develop synergies." Those three principles are what will keep the Alliance going forward.

The President of Nissan and Renault mentioned how other automotive alliances have failed and how his Alliance is going strong. He believes there are many reasons for it being successful. First, both companies kept their identities and management. Secondly, they have stayed on track to meet their business goals. The third and final reason is the results. Both manufacturers have synergies that allow them to work together to save on costs and increase profitability.

Ghosn reports, "By 2010, our target is to have 10 common platforms and eight common powertrains shared between Nissan and Renault vehicles worldwide." Renault is developing diesel engines that can be used by both companies. In addition, Nissan is creating gasoline engines that both manufacturers can use.

Before the alliance was announced in March 1999, Renault had a market capitalization of $10.7 billion. Right now, it's market capitalization is at $32.6 billion. Nissan has increased it's capitalization by over five times from $9.7 billion in 1999 to $52.3 billion today. Nissan-Renault is ranked second in profitability out of all the automakers worldwide.

In terms of the upcoming North American International Auto Show, Nissan has three cars in the running to win the 2007 Car of the Year Award. Those cars are the Altima, Versa and the Infiniti G35. There are a total of 11 cars in the running for this award. An announcement will be made in mid-December as to which cars will become finalists for the prestigious award.

The media questioned Ghosn about adding a third partner to the alliance. The President and CEO said, "Why Not? To enlarge the Alliance to a third partner, we would have to make sure that it is compatible with the commitments of the two existing companies -- that is, NISSAN Value-Up and Renault Commitment 2009 -- and that the opportunity would be far outweighed by the risks."

Ghosn said adding an American partner to the alliance would make sense. Right now, he wants to focus on making Nissan more profitable. He said, now is not the right time and he is in no hurry to do so. When the time is right, he will look into adding another partner to the current alliance.

Local high school students get the opportunity to ask a question

Area high school students had the chance to ask Mr. Carlos Ghosn a question. One of the questions was regarding the future of the automotive industry. What will it look like in the next five to 10 years? Ghosn, "Tough. It's a challenging industry. New competitors coming to the market. Cars are a rational buy and an emotional buy too. It's going to require a lot of innovation."

Another student asked if Ghosn had plans of bringing Renault to the U.S. market. Ghosn replied, "No intention to bring Renault to U.S. market."

A high school student asked how he could increase Nissan's market share in the Detroit area. Ghosn answered, "We have to be more present. There is a lot of cross-shopping between the three Japanese automakers."

A member of the Detroit Economic Club asked Ghosn a question about health care. Many of Nissan's workers are younger than autoworkers at Ford, GM and Chrysler. Ghosn replied, "We have less senority in the U.S. market. We know that it is coming. The debate on health care keeps coming back. I don't have any solution." Health care will become a bigger issue for Nissan in the months and years ahead.

After Ghosn's speech was over, he held a press conference to speak with the media. In regards to adding a new partner to the alliance, Ghosn said he will not be the one calling. However, he said, "It someone calls, I will answer." If it is the right moment, the President and CEO said he would accept the offer. They are not active in seeking a third partner.

In respect to the three Chinese automakers that are coming to the 2007 NAIAS, Ghosn said there may be a need for cars below $10,000. Ghosn added, "The Chinese want to play a bigger role. What the Chinese can do, any manufacturer can do. Anyone os us can do it. We have the same possibility. We will need more capacity in the U.S. market."

AmericaJR.com Exclusive:

NISSAN-Renault President and CEO speaks at the Detroit Economic Club -- 11/17/06 (MP3)

Carlos Ghosn Speaks Part Two -- 11/17/06

PHOTO BY JASON RZUCIDLO / AMERICAJR.com

Beth Chappell, President & CEO of the Detroit Economic Club opens the meeting.

 

PHOTO BY JASON RZUCIDLO / AMERICAJR.com

The presiding officer was Sandra E. Pierce, President & CEO of Charter One Bank in Michigan and Indiana. She handled questions from the students and audience members.

 

PHOTO BY JASON RZUCIDLO / AMERICAJR.com

Carlos Ghosn shakes hands with Sandra E. Pierce before taking the podium to speak.

 

Click here to see more photos of Carlos Ghosn at the Detroit Economic Club.

 

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