NEW YORK — Carlos Ghosn ran Nissan Motor Co. for nearly two decades before stepping down as CEO this year to focus on his other roles — CEO of the Renault-Nissan-Mitsubishi Alliance and CEO of Renault.
He also remains chairman of Nissan and Mitsubishi Motors, of which the alliance acquired control last year.
Ghosn, 63, is determined to strengthen the ties that bind Renault, Nissan and Mitsubishi. He says there are still significant synergies to be gained by co-developing vehicles, sharing powertrains, stitching together supply chains and splitting the costs of advanced new technologies.
He met this month with News Editor Lindsay Chappell at the alliance's office here to discuss the alliance's new six-year business plan.
Q: The new alliance business plan envisions combined sales of 14 million vehicles a year for Nissan, Renault and Mitsubishi by the end of 2022, up from about 10 million this year. Where will that volume increase come from?
A: We'll end up this year at around 10.6 million units sold. When we say that by the end of fiscal 2022 we'll cross the mark of 14 million, that's a growth of about 3.5 million.
Where it will come from is not the United States — some will, but not the bulk of it. And certainly not Europe, because the European market will be stable. Most of it will come from China. As you know, Nissan is deploying its product strategy in China and Renault is starting in China and Mitsubishi is in full growth in China. China is a big factor — not only the growth of the market but the growth of the companies there.
The second big factor will be the recovery of two markets where the alliance is strong and we have been investing for the past few years, which is Russia and Brazil.
Those markets have been down significantly. But in Russia today, we enjoy a 35 to 40 percent market share. The recovery in Russia has started and it will benefit us as the largest player there. It is currently selling about 1.4 million cars a year — it will come back to 3 million. When you have 35 percent market share, even if the market goes to 2.5 million sales, that's an opportunity for us. And we already have the capacity there to do that.
Brazil is another opportunity. Nissan is still a very small company in Brazil. We have invested a lot but have not seen results yet because the market collapsed as soon as the plant started to produce. And Renault is introducing a lot of product there and Mitsubishi also has a huge opportunity in South America.
The alliance plan also envisions that four shared vehicle platforms will account for 9 million vehicles. The companies now have two. What shared platforms will be added?
We'll have 9 million cars produced on four platforms. The first one that's already done is the [compact and midsize] C/D platform. We will add a [subcompact] B platform. We already have the A-plus platform, but it's very little used by Nissan. The A is the Kwid, which is the very small and inexpensive car. And then there will be one platform for electric cars.
Under the new plan, common powertrains will spread to three-fourths of alliance vehicles, up from about one-third now. Why is that important?
Because powertrains are big investments. And frankly, the performance of the powertrain matters to the consumer, but not the origin of it. The diesel engines of Nissan in Europe are all from Renault. Consumers don't care. What they care about is the performance.
You have expressed frustration with the slow progress of getting Renault and Nissan working together on technologies and platforms after so many years. As alliance CEO, how will you speed things up?
When you bring together two different engineering organizations and try to get them to work together, it's always difficult. Not just for the auto industry.
What's helping us converge engineering now is the pressure on resources. We're in a period where the demand for resources is huge. There are so many breakthroughs coming. Artificial intelligence, all the components of autonomous drive, connectivity — there are plenty of things coming our way. And then you have your usual business, and also the emission regulations, where you have to develop and adapt diesel and gasoline engines, transmissions, electric cars and motors. The workload on an individual company's engineers is huge.
This huge workload is helping us share and divide the work. We can say, "Let's do this in common. Let's not duplicate." So it becomes less a matter of "not invented here."
It's also a cost issue. Because of the huge amount of new technology coming, the r&d costs are going to go up. We need to converge and have common platforms. And we need to have a much more serious conversation about what work should be done outside the company.
Nissan this year sold off AESC, its joint venture with NEC Corp. to supply EV batteries. Was that such an outsourcing decision?
It's absolutely the same logic. Our challenge at the alliance is to decide how to contain our r&d and investment budgets, to limit them to 7 or 8 percent growth, which is the maximum the company can really afford. Are there things we're doing internally that we can pass to suppliers in order to concentrate our resources on core business?
When we moved to mass-produce electric vehicles in 2009, there were no batteries on the market. Today, thanks to the growing enthusiasm for electric vehicles, a lot of suppliers are investing in batteries — Koreans, Japanese, Chinese, Americans, Germans. There is real competition. Now is the moment to say, let's sell this to somebody whose core business is batteries. Let's concentrate on making cars and electric motors.
Some companies are making the opposite decision. We'll see in five or 10 years who was right.
The new plan calls for an increase in the number of electric vehicles that the alliance companies sell to 12 models. What is your vision there?
In the beginning, it was Renault going by itself, because they were prototypes and we didn't know exactly where we were going. The Nissan Leaf had its own technology. The Renault Zoe has its own technology. Mitsubishi started with its own technology.
But now we're saying: one platform, one set of batteries, one set of motors. We're now saying that we're going to go together because our objectives are mass marketing and profitability.
These 12 are not, "This is our first venture." No, no. These are cars that will be profitable, with cost targets that are based on reputation and best of technology.
Where will the expected EV growth come from?
Mainly from China and from mature markets — Europe, Japan and the United States. We may have a surprise from the emerging markets but we're not counting on it.
What is the alliance's strategy for EVs in China?
In China, we can't sell the Leaf. Too expensive and too sophisticated. We can't sell the Renault Fluence. Too expensive. What sells in China? Low-cost electric cars. So we are putting engineers from the alliance to develop a low-cost [Renault] Kwid EV for China. I just test drove the car in China. It will be a very well engineered car at a very low cost.
And once it works in China, there's no reason you're not going to export the car to India, to Brazil, to the Middle East.
The business plan also calls for development of robotaxis and ride-hailing services. Why are they strategically important to the alliance?
We cannot ignore this technology. It's not going to represent a huge volume by the end of this plan. But as you develop autonomous cars, you're developing the technology that's also going to be necessary for driverless cars, or robotaxis. So we said, "Let's not stop at autonomous. Let's go to robotaxis." Nobody really knows exactly how big it's going to become.
As CEO of Renault, are you under any political pressure to produce more of Renault's volume in France?
Governments are always interested in you having more activity in the country where you are. You see it in Japan, in China, everywhere. The Americans are facing it in the United States. But usually, when you are growing, you have no pressure because you're also growing local production. You're hiring engineers, you're doing the right things.
I had pressure at Renault when production in France was going down, in 2009, 2010, 2011. But since then, production has been going up and hiring is going up. You don't hear any more about it. We're practically running at full capacity in France today. Every year, we're hiring about 2,000 people in France.
One of your former executives, Carlos Tavares, is trying to reintroduce Peugeot to the U.S. Do you have any desire to reintroduce Renault to the U.S.?
No, I'm not thinking about that. There is no opportunity for it in this midterm plan. The biggest priority for Renault in this plan is in China and Russia. Renault will be selling 70,000 cars in China this year and should be selling 550,000 by the end of the plan. In Russia, Renault needs to make sure to concentrate on the recovery of Russia.
For me, there are already enough engines for growth not to need to add another one.
Going to the U.S. and selling a few cars is easy. You need to have a real strategy of products and marketing. The U.S. is a very competitive market.
How critical to Mitsubishi's rebound in the U.S. will it be for the brand's vehicles to be made in the U.S.?
Local manufacturing depends on what size you're aiming for. It's possible to be a niche player in a large market without local manufacturing, If you're intending to be a full-fledged manufacturer, you need to decide to localize.
For 100,000 cars a year in the United States, you don't need to localize. If you say my goal is to sell 500,000 cars in the United States, local manufacturing is a must.
