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.