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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.
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."
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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