Renault and Nissan at a Turning Point

Renault and Nissan at a Turning Point

After Renault CEO and Chairman Carlos Ghosn was arrested on “suspicion of financial misconduct,” all eyes were on the company in the midst of a highly-publicized “alliance” developing between Renault, Nissan, and Mitsubishi. Ghosn was one of the primary drivers behind that “alliance,” and his status threatened to shake it to its core. What could Renault do? At such a critical juncture in the vision coming to fruition, it would be difficult for Renault to cut ties with Ghosn completely, but they had to do something to save face publicly.

 So, last week, Renault appointed an “acting” CEO, Thierry Bolloré, while tacitly delaying the actual – and some said inevitable – removal of Ghosn. As Ghosn’s legal trouble played out in international headlines, Philippe Lagayette would chair board meetings. All are waiting to see how bad things get – or don’t get – for Ghosn.

It’s potentially very bad, both for Ghosn and for Renault. He’s being charged with “significantly under-reporting his compensation” as well as “misusing company assets” according to multiple media outlets. According to Japanese media, Ghosn allegedly “failed to properly disclose homes provided by Nissan,” and “may have pocketed cash” meant for other executives at Nissan.

So, what does Renault have to say about all this? Not much, at least for now: “The Board is unable to comment on the evidence seemingly gathered against Mr. Ghosn by Nissan and the Japanese judicial authorities…”

 Given all the uncertainties in the case, as well as the “alliance” at risk if all this goes from bad to worse, not saying much is likely the best way to go. Pushing forward with daily operations while closely monitoring the developing case and building out plans for “what if” scenarios are good next steps. But, if the allegations against Ghosn are proved, at some point Renault will be forced to choose between its Chairman and CEO and its future.

And, in the meantime, the company needs to get some counter-messaging out there to keep stock prices from falling further than they already have and to get consumer and investor confidence back up that, despite what’s happening with Ghosn, the company is in good hands and the future is bright.

That may sound simple until you step back and look at how much Ghosn has meant to the company during his tenure. When he arrived at Renault, one of the first items of business was a “major restructuring” of the entire company, a plan that has been lauded locally and internationally as moving the company forward in a very positive direction. Ghosn also did the same at Nissan, becoming, in 2005, the first executive to helm two Fortune Global 500 companies at the same time.

Given this track record, Ghosn is much more than just the leader at the company. He’s the visionary that saved not one but two major brands, who are now facing the potential of a future without him.

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