Emmanuel Macron Is Hardly Blameless Over Nissan

(Bloomberg Opinion) -- Making cars is always an intensely political business, one that brings good local jobs and global prestige. This applies to France as much as anywhere else; the country places the same importance on its carmakers as it does on playing host to Airbus SE.

The French have been happy to pursue international partnerships for their companies – the Germans and Spanish on Airbus, the Dutch at Air France-KLM – just so long as the state is able to retain a large degree of control. This applies to cars too. But today its approach to industrial capitalism is facing its biggest test after the shocking arrest in Japan of Carlos Ghosn, head of the Renault-Nissan-Mitsubishi Alliance.

The way in which the driving force of the Franco-Japanese autos tie-up was carted off to prison, and told he would be fired by Nissan Motor Co Ltd’s CEO Hiroto Saikawa, went beyond mere legal and corporate procedure and squarely into the political realm, in the view of Paris. (His firing as Nissan’s chairman was confirmed by the board on Thursday.) Renault SA owns 43 percent of Nissan’s equity and, for the French, their country’s interests are at stake. Attack Ghosn, and you attack the alliance.

But, if this is a palace coup by the Japanese executives at Nissan, as my colleague David Fickling has suggested, France and its president Emmanuel Macron are hardly blameless. Ghosn himself has regularly tussled with his government about the need to reduce the French state’s 15 percent stake in Renault to clear the way for deeper ties with the Japanese. Instead, Macron enraged Ghosn in 2015 when, as economy minister, he temporarily increased the government’s holding. That didn’t go down too well in Tokyo, which naturally worries about too much French influence over Japan’s carmakers.

In hindsight, even an interventionist like Macron must recognize now that France’s pursuit of an ever closer union between Renault and Nissan, while Paris keeps hold of such a large stake, has made the alliance more fragile. The French government endorsed Ghosn as Renault CEO for another four years in February, even as the executive made way for Saikawa at Nissan. Given the rancor that’s emerged this week, maybe that would have been the time for a bigger change.

And it’s true that the alliance has started to seem lopsided. While Renault owns that 43 percent of Nissan, Nissan holds only 15 percent of Renault and yet contributes most of the alliance profits. Reports that Ghosn had started work this year on a full merger of the two companies won’t have helped soothe Japanese anxieties. It may well have been a catalyst for this week’s events. 

Paris’s business and political elite are closing ranks behind Renault and stopping short of condemning Ghosn, who has been accused of alleged financial violations related to his compensation. Japan and France both strongly backed the Renault-Nissan alliance on Thursday. But the drama around Ghosn, and Saikawa’s unusually dismissive summary of his achievements at Nissan, are also a message that Japan can go its own way.

Macron’s administration could do a few things to repair relations. An acknowledgement that the alliance can’t depend on one man would be a start, perhaps with a new dual CEO-chairman structure. There should also be a full and frank reckoning of the financial benefits of the tie-up. Cost savings in purchasing and engineering platforms have delivered so far, but more can be done. Lastly, there needs to be an accord on making sure the stakes and the voting rights held by both sides are fair.

France is desperate to protect its approach to international partnerships. It knows that Renault would be too small to survive alone, and would either fall prey to a foreign buyer or face the unpleasant prospect of a domestic tie-up with Peugeot, which would inevitably involve thousands of job losses. A full Nissan merger will clearly not happen now. To make sure the alliance doesn’t wither on the vine, France needs to help bridge the trust gap.

To contact the editor responsible for this story: James Boxell at jboxell@bloomberg.net

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.

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