Nissan Motor Co. CEO Carlos Ghosn is preparing to add the title of CEO of Renault SA in less than two months. Ghosn's book, Shift: Inside Nissan's Historic Revival, offers his industry views.
Initially published in French, the book provides insights into Renault CEO Louis Schweitzer's assignment of Ghosn to Japan to fix Nissan. Ghosn also discusses the difficulties faced by General Motors and Ford Motor Co., new technologies and the drawbacks of the European vehicle market. Here are excerpts.
On how Schweitzer gave him the assignment to turn around Nissan:
"(Schweitzer) told me, 'You must be aware that I have only one person in mind who can go to Japan and do this job, and that person is you.' Was I surprised? No. Considering my record, it seemed the next logical step. ... And being as objective as possible under the circumstances, I thought that if I were in Louis Schweitzer's place, I'd have chosen me, too."
On GM and Ford:
"I am convinced that if General Motors and Ford are having difficulties today, it's because they haven't become truly global corporations. They have remained too American. They realize most of their profits in the United States. They seem unable to make satisfactory, stable profits elsewhere, not in Europe, not in Latin America and not in Asia."
On why all automakers dream of selling cars in the United States:
"Nissan intrinsically is more profitable than Renault because the U.S. market is much more profitable than other markets. If the Japanese automobile manufacturers today are intrinsically more profitable than their European rivals, that's due in large part to their presence in North America."
On a possible Renault return to the United States:
"If Renault were alone, the question of its return to the American market would be vexed and insoluble. It's impossible to build a global enterprise without a presence in the United States. But that's not Renault's immediate priority. ... Only when Nissan reaches its potential in North America will it be the time to reopen the question of Renault's return there. ... Had Nissan been alone, the necessity of strengthening its presence in Europe would have been much more pressing."
On the differences in the U.S., European and Japanese markets:
"Why is the American market the most profitable in the world today? Because the product mix is the richest. Volume is huge and yet there's only one culture. When we launch an advertising campaign in the United States, it's a single campaign for a market of 16 million vehicles. When you talk to your dealers, you use one language. Sixteen million cars, one culture, a unique marketing approach and a very rich market mix.
A new book by Nissan CEO Carlos Ghosn analyses the auto industry.
"The Japanese market is in an intermediary position. Japan is one country with one culture, but the volume is smaller and the mix is getting poorer, with entry-level cars superseding upper-range cars."
On low-pollution cars:
"I've been criticized for not believing in hybrid cars, for missing an opportunity. Very well. Wait and see what happens in coming years. ... If you try to develop everything at the same time, your financial situation gets out of sync with your main rivals. And you always end up paying for that. It is impossible to make a clear-cut choice between thermal engines, diesel, hybrids, electrical engines or fuel cells."
On Nissan's action plan:
"The reduction in development time is one of our major efforts. I did not mention it in our (Nissan) 180 plan because it is extremely sensitive from a competition point of view. But we are heading toward a significant reduction. The challenge is to maintain quality and meet launch deadlines."
On the comparative advantage in building cars in Japan or China:
"I don't envisage reducing production capacity in Japan. What we removed was already lying idle. Rather than Japanese labor costs, the foreign expansion (of Nissan operations) reflects the refusal to take a foreign exchange risk. As much as possible, one has to source and assemble (cars) in the currency in which you're selling them, to reduce risk.
"Wages are not the only thing that matters, particularly for goods with high added value such as cars. When someone suggests building cars in China to export them to Japan, my answer is that it's not tomorrow that we'll be able to build cars in China that meet Japanese customers' standards.
"Today, it is Nissan (that) plays the most important role in China, but this opens opportunities for Renault in the future."
On Nissan's cooperation with China's Dongfeng Motor Corp.:
"We'll do everything to take Dongfeng's competitiveness to the highest level in China. ... As we are doing something different from other carmakers, we will no doubt benefit from a different degree of support by the (Chinese) government."
On how Ghosn will run Renault and Nissan:
"It is true that the arrangement planned for 2005 is unheard of. But then the alliance is unheard of and what we did at Nissan is unheard of. There is a kind of continuity in the 'unheard of' theme. ... To lead two companies of that size at the same time does not frighten me. On the contrary, I find it elating. We are creating a new model; new references in terms of management; but the experience we are going through will be useful beyond the corporate world. ... Innovation in management, that's my cup of tea.
"There will be more Nissan people allocated to Renault (but) one won't see a Nissan 'commando' returning to Billancourt (Renault's headquarters near Paris) with me. We shall keep increasing the flow of Renault people who get jobs at Nissan and vice-versa."
On his choice of a successor at Nissan:
"For the choice of the (COO) at Nissan, I have many names in mind. I am observing (the candidates). ... It's very likely he will be a Japanese. For the company's morale, it would be good that he be Japanese. But he will have to be very open to the world, very ambitious for the company and a top performer. ... He is already at Nissan. He won't come from the outside."
On the situation at Renault, which he joined from tire supplier Michelin in 1996 and left for Nissan in 1999:
"There was a big difference between Renault in 1996 and Renault in 1999. ... Since then, Renault has stalled a little. But obviously, Renault has made a huge investment in money, human resources and time, in order to develop the Alliance. c
Excerpted with permission of the publisher, Currency Press Pty Ltd., from Shift: Inside Nissan's Historic Revival by Carlos Ghosn and Philippe Ries. Copyright 2004 by Currency Press Pty Ltd.