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Nissan-Renault’s Ghosn: From Hero To Zero

[bctt tweet=”The once-famed Nissan leader has fallen with allegations relating to financial misconduct and dragging the company along with him.” username=”Z6Mag”]

Renault-Nissan Alliance. Photo from:




In a time when Nissan was on the brink of declaring bankruptcy, Carlos Ghosn stepped in not only to save the company but help it to rise back as one of the world’s top car manufacturers. Today, Nissan is facing a similar financial crisis, but this time around, the Japanese carmaker had Ghosn removed from the company.

Through Ghosn’s efforts of restructuring and eventually, reintroducing innovations to Nissan, the company rose significantly within the last two decades under Ghosn’s lead. He also made the Nissan-Renault-Mitsubishi agreement possible that made them one of the leading car companies in the world.

The company had a good track record. But, CNN reported last Tuesday, May 14, that Nissan posted a significant drop in profits where operating profits plunged to 45% at 318 billion yen ($2.9 billion) in the fiscal year that ended in March and revenue fell 3% to about 11.6 trillion yen ($105 billion), while vehicle sales were down 4.4% to 5.5 million.

This is “rock bottom,” Nissan CEO Hiroto Saikawa said during the earnings presentation.

Moreover, analysts also expect Nissan to plunge at decade-low numbers in the coming year. Nissan forecasts operating profit for the fiscal year to March 2020 would fall to 230 billion ($2.1 billion). Also, Nissan shares closed down at 3% in Tokyo.

On Friday, May 17, the Japanese carmaker proposed plans to make changes within its executive board as a reaction to Ghosn’s fallout from the company.

The firm told shareholders that they would start implementing a new board structure composed of 11 members, which 6 of whom would be external.

“With the lessons from the recent executive misconduct still fresh, Nissan resolves to rigorously pursue the separation of supervisory and executive functions,” said the firm.

Thierry Bollore, Renault’s chief executive and chairman Jean-Dominique Senard will both be included in the proposed board.

Nissan conceded to allowing Senard into the board though Bollore’s urges. The Japanese firm isn’t too happy about Senard siding with Ghosn during his arrest.

On the other hand, Nissan’s current CEO Hiroto Saikawa has also been reported to be pressured from vacating his position in the company for doubts that he is capable of turning things around for the company and his close relations with Ghosn.

Saikawa responded that he wishes to stay on the company until he sees it return to profitability and will consider the idea of stepping down “at the appropriate time.”

Additionally, Saikawa told reporters that Renault chairman Senard “has one idea in mind, which is integration or merger.” He also added that “what we’ve told Mr. Senard is this is not the right timing to discuss this matter.”

Regarding the topic of a possible merger between Renault and Nissan, the Japanese company seems to be against the idea since Nissan brings in a lot more profitable compared to the two. But, ironically, Renault holds more stake in the company.

Obviously, the Japanese brand has been struggling to manage internal structures with Ghosn leaving its ranks for multiple cases alleging financial misconduct.

Allegedly, Ghosn is accused of abusing and taking advantage of his power and position in the company to meet personal gains. Specifically, Ghosn allegedly used a Nissan subsidiary to send millions of dollars of payments to a business partner of the company abroad, which then sent money to a third company that he controlled. The actions were taken for the purpose of obtaining a “personal profit,” The New York Times reports.

Prosecutors accused Ghosn of using the method on three occasions from December 2015 to July 2018, resulting in a total of $5 million in losses to Nissan.

As of date, Ghosn has been arrested on four separate occasions including the first arrest in November on charges of underreporting his compensation. The second when he was rearrested on related charges and then a third time on suspicion that he had shifted his personal financial losses onto Nissan’s books.

However, Ghosn and his team of lawyers have consistently denied all allegations about him. In a video Ghosn posted before his fourth arrest, he told that the allegations made against him “is about a plot, this is about conspiracy, this is about backstabbing.”

Meanwhile, the French carmaker, Renault also made new allegations against Ghosn, claiming that there were “questionable and concealed practices” regarding the expenses made under Ghosn. Moreover, Renault also announced Ghosn’s resignation from its board.

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Nissan Set To Lay-off 12,500 Workers Worldwide

Nissan Motor Corp. is working on reducing costs to revive its business after a poor performance in the 1Q.




Nissan Motor Co. announced that it would be laying off 12,500 workers from its offices worldwide. The decision arose from its poor performance in the first quarter of its fiscal year.

The automaker employs around 147,000 workers worldwide. Most of the job cuts are expected to be in factories in South America and other countries that have low profitability.

The job cuts will happen within the next three years in the hopes that Nissan’s business will be revived. Initially, the company announced that it would only reduce 4,800 jobs due to poor performance turnaround at the start of the year; however, it has now aimed to double the reductions.

Nissan has revealed on Thursday that its profits declined to almost 99% compared to its numbers in the last year.

Similar to other carmakers, Nissan has been facing challenges in sales and production, indirectly related to the US-China trade war and UK’s Brexit.

Ultimately, weak sales in the US and Europe have been a contributing factor to the decline in profits. Nissan’s vehicle sales were down to 4.4%. Meanwhile, Nissan’s stocks plummeted at least 3% in May. In the last six months, price shares decreased from $8.51 (¥920) to $7.09 (¥766).

New Nissan CEO Hiroto Saikawa has described this as the company’s “rock bottom.” Saikawa talked to Renault chairman that this is not the right time to discuss merger matters.

The business’ strategy of providing high incentives to US markets, to entice more consumers to buy their cars, has hurt the brand’s image. Nissan also focused on bringing in more fleet sales in the US, which contributed to losing the brand’s luxury status.

“If you see many Nissan vehicles lining up as rental cars at places such as an airport, people would think that they are cheap cars,” said Takeuchi.

Nissan is looking at reducing production and improving the brand’s image. At least 10% of Nissan’s production will be reduced for the fiscal year of 2022.

In March, Nissan decided to stop production of the Infiniti Q30 and Infiniti QX30 SUV in its plant in Sunderland, England. The decision affects 250 staff working in the plant.

The company decided to move the production of cars in Japan; since the Infiniti brand is not selling in the European market. The company plans to divert the premium brand to its US and Chinese markets.

Before the decision to pull-out the Infiniti brands from the Sunderland plant, the company already decided to pull-out its X-Trail car line.

Saikawa said in a news conference that the job cuts are necessary and would provide significant savings to the company.

The Arrests of Carlos Ghosn

Another factor to Nissan’s poor performance is the issues related to its former CEO, Carlos Ghosn. The ousted CEO was arrested last November 2018 and April 2019. In March, Ghosn was dismissed out of the Renault-Nissan-Mitsubishi partnership due to his arrest on charges of financial misconduct. Before that, Ghosn was forced out of his CEO position at Renault in January.

In November 2018, Ghosn was arrested at a tarmac in Tokyo related to personal use of funds from the Japanese carmaker company. In April 2019, he was again arrested related to making $5 million payments out of Nissan’s funds into a third party for his personal gain.

Ghosn has described his ousting as a plot to take him out of power. In April, Ghosn’s lawyers shared a video message from the former CEO.

Ghosn said, “This is about a plot. This about a conspiracy. This is about backstabbing.”

The former CEO further explains that the plot started from fear within the organization on the next steps of the merger between the three companies: Nissan, Renault, and Mitsubishi.

Allegedly, Ghosn abused his position as the CEO to project losses of personal investments into the company’s financial portfolio.

The alliance of Nissan-Renault-Mitsubishi restructured its management last March and formed a four-member board; composed of the three companies’ CEOs led by Renault’s new chairman Jean-Dominique Senard.

Ghosn is currently out on bail and is now on house arrest. The former CEO was in prison for over 100 days. Bail was allowed after the court ensured that he was no longer holding any management roles in the alliance of the three carmakers.

In June, Nissan announced that they would no longer be paying Ghosn’s retirement and compensation benefits. Ghosn’s retirement benefit amounted to $41 million (¥4.44 billion).

Ghosn has retaliated by filing a suit against Nissan Motor Co. and Mitsubishi Motors Corp. for the improper termination of his contract. He is seeking a total of $16.7 million (¥1.82 billion) in damages.

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Tesla Squash Critics With Record-Breaking Second Quarter Numbers

Tesla was previously criticized due to its weak first quarter, but its second-quarter figures easily prove them otherwise.



Photo by Claudio Schwarz | @purzlbaum on Unsplash

Tesla announced record-breaking numbers Tuesday on its production and deliveries in a press release, which was initially thought to be much lower than critics has expected. The newly announced second-quarter report also picks up after its disappointing first-quarter numbers.

Officially, Tesla’s production and delivery numbers totaled to a record-setting 87,048 electric cars produced and 95,200 delivered. There were 14,417 high-end Model X and Model S produced and 17,650 delivered. Meanwhile, the cheaper Model 3 impressively produced 72,531 and 77,500 delivered.

These number easily met the company’s second-quarter goals and beat last quarter’s 63,000 cars delivered with a 51.1% increase from its admittedly weak first three months of this year, which was also Tesla’s biggest drop in sales. It also surpassed its year-ago quarter, which only delivered 40,740 cars. Notably, the company was still struggling with production and deliveries.

Furthermore, the latest figures of 92,500 sets a new record beating the fourth-quarter of 2018 delivers of 90,700 cars Tesla sold in the last three months of that year.

The electric carmaker’s second-quarter figures also “blew away” analysts’ estimates of 91,000, according to data compiled by FactSet. Deliveries for the company’s biggest seller, Model 3, were only expected at 74,100 while combined shipments for the Model S sedans and Model X SUVs were only estimated at 16,600.

There were an additional 7,400 in transit at the end of the second-quarter even, but Tesla would rather include them in their third-quarter report. Tesla’s orders aren’t fully reflected in its delivery numbers until a buyer takes possession of the new car.

“Customer vehicles in transit at the end of the quarter were over 7,400. Due to the order-to-VIN matching process, we described in our Q1 2019 Shareholder Letter, which we extended to Model S and Model X in Q2 to improve process efficiency, this metric has become less relevant. As a result, we do not plan to disclose the customer vehicles in transit metric going forward.”

Due to particularly unique reasons, Tesla deliveries in the first-quarter dropped and has caused a cash crunch for the company’s share price. Tesla shares have lost more than a quarter of their value since the start of the year. In April, the company posted a first-quarter loss of $702 million.

Notably, Tesla faced a lot of issues during the first three months of 2019. The carmaker was plagued by challenges transporting cars from its factory in Fremont, California, across the world as well as questions about waning customer demand.

Also, the company’s decision to release the cheaper version of its electric cars, the Model 3, faced criticism and analysts told that it was a wrong decision from a strategic position since the company was making more from the pricing of its higher-end models.

Fortunately, the Model 3 turned out to be a prosperous gamble which accounted for Tesla’s impressive number today. In March, Elon Musk, the company founder, said that “given that [a lot happening in Q1], and we are taking a lot of one time charges, there are a lot of challenges getting cars to China and Europe, we do not expect to be profitable. We do think that profitability in Q2 is likely.”

Furthermore, the Securities and Exchange Commission was also on Musk’s heels in February as he tweeted about producing an estimated 500,000 cars by the end of the year when analyst estimates only predicted 400,000 — leading to an SEC filing with Musk breaching a previous settlement.

Today, Tesla is addressing its struggle with production and deliveries as they have “made significant progress streamlining [their] global logistics and delivery operations at higher volumes, enabling cost efficiencies and improvements to our working capital position.”

Looking forward to next quarter’s deliveries, “orders generated during the quarter exceeded our deliveries, thus we are entering Q3 with an increase in our order backlog. We believe we are well positioned to continue growing total production and deliveries in Q3.”

The company is “well positioned to continue growing total production and deliveries” in the coming quarter. Tesla also received more new orders last quarter than the total number of deliveries it recorded. That could indicate that there’s still strong demand for Tesla vehicles.

The company’s stock jumped by about 7% in after-market trading. Tesla also hinted at a strong third-quarter.

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Europe Wants Electric Cars To Make Noise

The European Union set new rules on electric vehicles that require them to make a noise at certain speeds to improve pedestrian safety.



Photo by Moritz Kindler on Unsplash

The European Union set new rules regarding electric cars sold in its territory to produce “noise” to ensure pedestrian safety. The new guideline follows Europe’s promise to become zero-carbon by 2050.

The European Union deems that electric and hybrid vehicles sold from here on out should be able to produce noise when traveling at speeds below 19 km/h (12 mph) to alert unsuspecting pedestrians and cyclists.

Furthermore, the new rule also applies to electric vehicles already sold and operating in any of the union’s countries by 2021. Manufacturers and users will then have to find a workaround or retrofits to comply.

The noise-making system called Acoustic Vehicle Alert System or AVAS, an ironic move by Europe whereas electric vehicles were initially marketed as a quieter version of the conventional four-wheeled cars on the streets.

Quite reasonably, the charity Guide Dogs complained that electric cars were hard to hear when they were approaching. In a written submission to the British Parliament in November 2017, the charity pointed to a research that says, “electric and hybrid vehicles are 40 percent more likely to be involved in an accident which causes injury to a pedestrian.”

Notably, the charity is part of the British Blind Association where they offer guide dogs services for the partially blind and fully blind.

Roads minister Michael Ellis told BBC that the government wanted “the benefits of green transport to be felt by everyone” and understood the concerns of the visually impaired. “This new requirement will give pedestrians added confidence when crossing the road,” he added.

However, the charity noted that the artificial sound should be present in all speeds, given that electric and hybrid vehicles can jump from 0 to 60 mph speeds in just a few seconds. But they did welcome the new rule set by the Union.

In a tweet by BBC News, they provided an auditory demonstration of how these sounds may perform on the streets. Though they may sound less futuristic and more of a metallic clank, manufacturers can still develop it in the future.

“New regulations will require all new electric vehicles to feature a warning noise to alert pedestrians and cyclists. Listen to the warning noise below.”
BBC Radio 5 Twitter

The new rule set by Europe also follows its commitment to producing zero emissions by 2050. Furthermore, the Union also noted that they would ban the sale of all carbon cars by 2040. Paris even wants to it earlier by setting a 2030 deadline.

As of the moment, more than one million plug-in electric passenger cars and vans have been registered in Europe by June 2018, making the region the world’s second largest market after China. Furthermore, the European passenger plug-in vehicle market scored some 37,000 registrations in April, growing 30% compared to the same period last year.

In April, fully electric vehicles (BEVs) jumped 70% year over year (YoY), to some 24,000 deliveries, and were responsible for 65% of all plug-in sales in the month while plug-in hybrids (PHEVs) share jumped to 2.8%, and that makes the 2019 plug-in vehicle (PEV) share 3.0%.

Top 15 selling plug-in electric car models in Europe in 2017:

Ranking Model Total sales/
1 Mitsubishi Outlander P-HEV 100,097
2 Renault Zoe 91,927
3 Nissan Leaf 84,947
4 BMW i3 59,122
5 Tesla Model S 54,116
6 Volkswagen Golf GTE 38,993
7 Volkswagen e-Golf 33,644
8 Volkswagen Passat GTE 31,632
9 Renault Kangoo Z.E. 29,150
10 Audi A3 e-tron 28,209
11 Volvo V60 Plug-in Hybrid 25,694
12 Mercedes-Benz C 350 e 22,049
13 Volvo XC90 T8 19,969
14 BMW 330e iPerformance 18,808
15 BMW 225xe Active Tourer 16,720

Notably, US electric car maker, Tesla is catching on with rankings as Elon Musk confirmed that it would be expanding its sales across Eastern Europe but not until 2020.

In a monthly model report this June by Clean Technica, the Tesla Model 3 ranked second after French automaker, Renault. “After a delivery peak in March, the poster child for electromobility has dropped to more “normal” performances, with Tesla delivering 3,738 units of its sedan in April. Looking at individual markets, the midsize model was mainly delivered in Norway (720 units), Germany (514), the Netherlands (467), Switzerland (492), and Sweden (446).”

In a global perspective, Europe isn’t the only regulator that is taking more precautionary measures with the rise of electric cars. In the US, the National Highway Traffic Safety Administration will require that all hybrid and electric vehicles emit artificial noise by September 2020, but at faster speeds of 18.6 mph.

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