Carlos Ghosn, chief executive officer of Renault SA and Nissan Motor Co., left, attends a news conference in Seoul, South Korea. (Photographer: SeongJoon Cho/Bloomberg *** Local Caption *** Carlos Ghosn)

France Starts to Shift Its Position on Nissan

(Bloomberg Opinion) -- Carlos Ghosn was the glue that held the Renault-Nissan Alliance together. As he languishes in a Japanese jail a month after his shocking arrest on suspicion of understating pay and misusing company assets — allegations he has denied — the partnership is in danger of becoming unstuck. Whatever the future for the 64-year-old, the alliance would do well to adjust to a new era.

Recent events have pointed to an escalation in Franco-Japanese tensions over the arrest. Renault has consistently supported its chairman and chief executive, arguing that it hasn’t seen proof to eject him in the way Nissan did — a position broadly supported in Parisian circles. Nissan, meanwhile, has dug in its heels, refusing to accede to French demands for a shareholder meeting (Renault owns 43 percent of Nissan, and Nissan 15 percent of Renault.) The Japanese company says it will set its own timetable to replace Ghosn.

Now there’s the added element of mounting internal division on the French side. As Renault publicly puts on a show of unity, Emmanuel Macron’s government — which also owns 15 percent of the French carmaker — has reportedly been scouting around for possible replacements. Le Figaro reported at the weekend that Michelin boss Jean-Dominique Senard was top of the list to take the chairmanship, should Ghosn be replaced eventually, with acting chief Thierry Bollore taking the separate CEO role.

France Starts to Shift Its Position on Nissan

This suggests two things. One, that Paris has come around to the idea that Ghosn will be out of operational action for the foreseeable future, or most of 2019, whatever the merits of the case against him. And two, that if the Renault-Nissan Alliance is to be saved, better governance and new faces at the top are needed — even if Ghosn does clear his name and return.

Splitting the top roles at Renault would be a welcome break from a past where too much power was concentrated in the hands of one man, however capable. Before his arrest, Ghosn was Nissan chairman, chairman and CEO of Renault and chairman and CEO of the Renault-Nissan alliance. The latter, based in Amsterdam, would also benefit from a separation of powers at the top. It might help Japan and France find common ground.

Whatever the French think about the merits of the case against Ghosn, this is also a good moment to look at the deeply inequitable balance of power at the heart of the alliance. While Renault owns that 43 percent Nissan stake, the latter contributes most of the alliance’s profits. A more equal structure of cross-shareholdings, similar to those held by France and Germany in Airbus SE, would address Japanese resentment. A freeing-up of capital held in Nissan, and a new ownership pact, would also be good for Renault’s stock, which has suffered this year.

France Starts to Shift Its Position on Nissan

Unfortunately, nationalist passions, once unleashed, are hard to restrain. While both France and Japan have talked up their desire to preserve the alliance, few olive branches have actually been proffered. A climb-down from the French government over changing the status quo on the shareholder structure, however tentative, would be one way to show it can move beyond the time where Ghosn reigned supreme.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Lionel Laurent is a Bloomberg Opinion columnist covering finance and markets. He previously worked at Reuters and Forbes.

©2018 Bloomberg L.P.