Renault Nissan revamped alliance is far from Ghosn's vision, former exec says

Editor's note: Automotive News interviewed Greg Kelly on Jan. 30 in Detroit. A previous version of this story misstated when the interview took place.

The rebalancing of the Renault Nissan Mitsubishi alliance opens a new chapter for the long-uneasy Franco-Japanese partnership in the wake of the arrest of its former chairman.

But one man still fighting its past, former Nissan executive Greg Kelly, says the carmakers missed a golden opportunity to better strengthen their position as a leading global auto group.

Under the plan envisioned by former Chairman Carlos Ghosn, the alliance partners would have achieved unprecedented scale and Nissan would have assumed the leading role, said Kelly, the American director charged in Ghosn's 2018 alleged financial misconduct case.

"Nissan would have been first among equals," Kelly told Automotive News on Jan. 30, shortly before the companies formally unveiled their restructured cross-holding framework.

"I do think it relates back to everything that happened in 2018, and different visions for the group," he said. "Clearly, the vision for the group here looks to more separation. Whereas I was in favor of a permanent restructuring that would have been beneficial to Nissan and to Renault."

This month's revamp sees Renault reducing its controlling stake in Nissan to 15 percent from 43 percent, giving Nissan and Renault equal stakes of 15 percent in each other. Leaders of the two companies say the new framework gives greater autonomy to the companies, allowing them to pursue their own product and technology strategies without making sub-optimal compromises.

By contrast, Ghosn's vision for a 50-50 merger of Renault and Nissan under a holding company would have boosted Nissan's standing in the partnership, said Kelly, who headed the Japanese company's legal and human resources divisions and had a hand in alliance strategic affairs.

Ghosn's plan to further expand the alliance by tying up with Fiat Chrysler Automobiles would have elevated the group to a new level of unprecedented scale under unified leadership.

"It would have been really beneficial and fantastic to have this combination," Kelly said, noting that Nissan would have been able to retain many talented executives who left in the wake of Ghosn's arrest and the ensuing collapse of relations between Renault and Nissan.

"You would have avoided four years of turmoil. You would now have Nissan Renault Fiat Chrysler tied up together, and you'd have a leadership team, as you've seen from the success they've had in other companies, that would have been fantastic," Kelly said. "Carlos Ghosn had a succession plan, and he had some really talented individuals in his organization."

Among those who left were Jose Muñoz, Nissan's former head of global performance, who left to become Hyundai's CEO for North America, and Nissan's global sales chief Daniele Schillaci, who bolted to become CEO of Italian brake-maker Brembo. Randy Parker, a high-level Nissan division general manager, also left to join Hyundai. Also gone: Trevor Mann, the longtime Nissan executive who was envisioned as taking on a joint operational leadership role at the new alliance.

There is also Vincent Cobee, who left and became CEO of Citroen, and Arun Bajaj, global head of human relations for the alliance, who was drummed out and now heads HR at Canadian apparel maker Gildan.

Kelly called Nissan CEO Makoto Uchida and COO Ashwani Gupta "talented individuals."

"The thing that I think would be of great benefit to Nissan is to have those two, plus all the others that left," Kelly said. "We had a tremendous management team."

Kelly said that under Ghosn's plan, Nissan executives would wind up holding key alliance posts.

"In 2018, we were in a position," he said, "to make Nissan more profitable, which would benefit the stakeholders by essentially putting the companies under a holding company structure, which would have created more synergies from the cost and revenue side."

Added Kelly: "I think it would have created job security."

In announcing the restructured alliance on Feb. 6, Renault CEO Luca de Meo said he didn't want to fall into the habit of making concrete synergy forecasts, as was regularly done during the Ghosn era. But he predicted the reboot will generate hundreds of millions, possibly billions, of euros "in value every year, if everything works perfectly." But de Meo offered few details.

Before his arrest, Ghosn built his alliance into the world's top seller of light vehicles, moving a combined 10.6 million units in 2017 —nearly one of every eight vehicles sold globally.

Sales and profits, however, plunged after his arrest. In 2022 alone, Renault Group's global sales slid 5.9 percent to 2.05 million, and Nissan's volume shrank 21 percent to 3.23 million. Mitsubishi shipped in just 880,000 vehicles last year, as worldwide retail shipments declined 4.2 percent.

Today, their share prices have yet to recover. Renault's stock is down 37 percent from the time of Ghosn's arrest, Nissan's has lost 53 percent and Mitsubishi has given up 31 percent.

Like the three companies of the alliance, Kelly, 66, is still digging out from the Ghosn scandal.

Today he is back at home with his wife, Dee, in the Nashville area, where the couple spent Christmas with family for the first time since 2017. But his legal odyssey is far from over.

After being lured to Japan for a meeting in November 2018, Kelly was arrested the same day as Ghosn in a coordinated sting. Prosecutors accused Kelly and Ghosn of hiding some 9.3 billion yen ($70.9 million) in postponed compensation from 2010 to 2018. Both men deny wrongdoing.

After being jailed for more than a month and then being grounded in Japan on bail, Kelly endured a three-year legal battle in Japan against the criminal charges.

Ghosn, 68, fled Japan for Lebanon in 2019, leaving Kelly to fight the charges alone. Since the ordeal began, Kelly says he has spoken with Ghosn once — last spring to check in on family.

Kelly's 17-month trial reached its climax in March 2022, when a Tokyo court cleared him on most counts and handed a six-month suspended sentence for allegedly aiding Ghosn in one of the eight years under scrutiny by prosecutors. He returned to the U.S. that month and teared up with joy upon arrival as he was welcomed back to Tennessee by U.S. Sen. William Hagerty.

Kelly says the compensation question was an internal corporate issue to be handled before the board, not before a judge. The matter involved compensation being considered for Ghosn that was never disbursed or even officially decided, Kelly said. Thus, there was no obligation to report it.

"The evidence in court showed, without a doubt, this was a corporate matter," Kelly said.

"If this had gone to the Nissan board, as it should have under the Japanese companies act, Carlos Ghosn would have said, 'I'm not owed any money,' " Kelly said.

"And the board would have correctly said, 'Hey, there's nothing to report.' "

Kelly and Ghosn say their arrests were engineered by old-guard nationalists inside Nissan and the Japanese government who framed them on false financial misconduct charges to block him from further integrating the Japanese automaker into Renault under a holding company.

"This thing was a coup," Kelly said. "This was a small group of people that just had a different vision and really went about it the wrong way."

At Kelly's trial, former Nissan executives accused of leading the conspiracy to oust Ghosn testified that they were indeed against Ghosn's merger plans and met secretly for lunches to discuss the matter. They eventually coordinated with prosecutors on the criminal charges.

But a key figure, Hitoshi Kawaguchi, the senior vice president in charge of government relations at the time, maintained that these were two separate issues — the merger they didn't want and the allegations of financial improprieties by Ghosn.

"We never fabricated any piece of evidence to substantiate this crime as a way to stop a merger," Kawaguchi said in court.

Today, more than four years after his arrest, Kelly's case continues to grind through the courts.

Kelly's defense team has filed an appeal against the guilty verdict, insisting on full vindication for their client. Meanwhile, Tokyo prosecutors have appealed the counts he was acquitted on.

"They actually ruled in my favor on every major fact and issue," Kelly said.

But under Japanese law, prosecutors are entitled to appeal not-guilty verdicts, handing them a potent weapon to bleed defendants through relentless appeals and spiraling legal bills.

"It's really not a justice system," Kelly said. "It's a prosecution system."

Meanwhile, Nissan is pursuing a civil case against Kelly in Japan. In June, his former employer moved to triple the amount he could be found liable for to 4.4 billion yen, or roughly $33.5 million.

"The past four years of our life," Kelly said, "have been a pretty stressful experience."