Oh My Ghosn: Nissan Chairman Arrested

What’s going on here?

Carlos Ghosn (aka ‘Le Cost Killer’) has lost chairmanship of two companies and lost his freedom in just two short weeks, following claims of financial misconduct.

What does this mean?

Following the disclosure of salary figures, an investigation revealed that Ghosn gave misleading figures and used company assets for personal use.

Ghosn, as the previous chairman of Mitsubishi Motors, Nissan and remaining chairman of Renault, formed an alliance between the three automobile manufacturers in September 2017. Prior to this scandal, Ghosn was a hero of the sector, credited with enabling the three companies to share technology and make advancements together. The success of this alliance has been clear, as last year the three companies were able to sell 10.6 million cars. However, not all have deserted him as Renault are still yet to remove him as chair of their company.

What’s the big picture effect?

Financial allegations aside, the termination of Ghosn’s leadership potentially marks an end to the success of the alliance. Moreover, the alliance’s intention was to share strengths. However, following this scandal, the three companies might only share reputation damage.

The effect on the market is not yet clear, but in December 2018, Renault’s stock value dropped considerably. This could have a negative effect on all three manufacturers. Moreover, Nissan has taken steps that suggest the alliance might be in turmoil by postponing the launch of their high performance Leaf electric car.

However, there has been criticism of the detention of Ghosn by those who believe there has not been conclusive evidence to support the claims against him. This is the reason cited by Renault, who have not yet moved to oust him.

The companies have publicly reassured critics that the alliance will remain and continue without Ghosn. Osamu Masuko (Chief executive of Mitsubishi Motors) stated that the alliance would adopt a group leadership style, with the alliance being led by all three company heads. This is at a stark contrast to the centralised control Ghosn acquired, which might be apt reassurance for those wanting a change in direction following the scandal.

Report written by Natasha D.

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