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Ghosn With the Wind: Nissan’s Former CEO Flees Japan, Now Resides in Lebanon

January 3, 2020 by admin Leave a Comment

Carlos Ghosn before his downfall. Photo courtesy of Nissan News.

Talk about a story filled with intrigue!

Former Nissan CEO Carlos Ghosn (pronounced Gone), under the watchful eyes of Japanese authorities, secretly left his home late last month and made his way to Lebanon, where he has taken residence. The executive’s bold move, certain to become the script for a Hollywood thriller, was illegal. That said, Ghosn insists he had no choice as he found the Japanese judicial system was “rigged” against him.

Ghosn’s story starts in 1999, when he crafted the alliance that united France’s Renault automobile group with Nissan Motors. This unlikely alliance effectively saved Nissan, while allowing Renault to tap its partner for a variety of vehicles. Later, Mitsubishi was added to the alliance, effectively forming the largest alliance of its kind in the world.

Although the two principal manufacturers benefited by working together, Ghosn was intent on bringing the companies closer together, likely through a full merger. Apparently, that move did not sit well with Nissan executives (perhaps valuing their independence), who then allegedly plotted to remove Ghosn from his position. Charges of financial impropriety were lodged against him and both companies removed Ghosn from their executive roles.

Meanwhile, Japanese authorities jailed Ghosn with the intent of convicting him of a series of crimes, which likely would have kept him Incarcerated until his death. The Japanese legal system is quite different from what we’re used to in the West, particularly in the United States, where an individual is considered innocent until proven guilty.

In Japan, an individual may stay in jail for months, if not years, until his trial is completed. Ghosn was not allowed attorney representation early on, and even then the contact was always limited. Twice he was released on bail, following arrest, the second time confined to his home in Japan under the watchful eyes of the authorities. He was also restricted from seeing his family, including his wife.

Just how Ghosn managed to leave Japan for Lebanon remains a mystery. A rumor that he was packed in a musical instrument box and shipped to Lebanon with a stop in Turkey, was one of the first stories to surface. The plot thickened when it appeared that the executive’s own family was involved, an allegation Ghosn later denied. At this point, we do not know the complete details of his whirlwind escape, but they will eventually emerge.

Beyond his uncanny escape and emergence in Lebanon, Ghosn will now fight back by settling some old scores. Expect the former executive to name names and point out misdeeds for both Nissan and Renault executives. Published reports indicate that the information he plans to share could prove devastating, especially to Nissan, which has been losing money and market share over the past few years.

Moreover, what’s also likely to be scrutinized is Japan’s legal system, which routinely jails individuals as prosecutors enjoy a conviction rate above 99 percent. That system essentially ensured conviction for Ghosn, even as he insisted upon his innocence.

Another result of Ghosn’s new-found freedom is the Renault-Nissan alliance itself – depending on what Ghosn shares — as its future may be in peril. Regardless, the fallout will be enormous as corporate and government officials wrestle with his escape and the subsequent detailing of Ghosn’s allegations.

Likely, Ghosn will support his charges with witnesses and perhaps documentation, both of which could make this story front pages news for a long time.

As for Ghosn’ future, it likely lies in Lebanon as this Middle Eastern country does not have an extradition treaty with Japan. Ghosn also has French and Brazilian passports, but they’re in the hands of his attorney in Japan. On Thursday, Interpol delivered a “red notice” to Lebanon which is “a request to law enforcement worldwide to locate and provisionally arrest a person pending extradition, surrender, or similar legal action.” It isn’t an arrest warrant, but it does mean Lebanese authorities will interview Ghosn to get his side of the story in this highly charged affair.

See Also — Top Automotive Stories of 2019

Deal Undone:
Fiat Chrysler Renault Merger

June 7, 2019 by admin 2 Comments

It was a merger of equals, bringing together automakers with a strong presence in Europe and the Americas. The deal seemed to emerge from nowhere and just as quickly it died. Whatever thoughts you had about a Fiat Chrysler Renault tie-up, it isn’t going to happen. At least not in the near future.

Fiat suddenly pulled out of the deal on Wednesday, reportedly weary of the delays it ultimately pinned on the French government. Renault itself was onboard — but the company is also partially owned by the French, thus government involvement was and is an important consideration in the manner the automaker is operated.

Ghosn is Gone

Apparently, the French were waiting on Nissan’s feedback, a company allied with Renault. Although not directly involved in the merger, Nissan would have a significant say in how the alliance would continue after the merger. At first, the Japanese automaker seemed indifferent to the merger, but the French were concerned that the alliance might unravel later. Further, where Carlos Ghosn once held Renault, Nissan, and Mitsubishi together, his leadership is no longer a factor. In fact, Ghosn is in legal trouble with Nissan and that dilemma extends to the Japanese government itself.

Oh, what a tangled web we weave! (When first we practise to deceive!)

Although deception isn’t listed as one of the reasons for the failed merger (with apologies to Sir Walter Scott), a lack of trust certainly was. Indeed, the post-mortem showed much weariness on Fiat’s part in getting the French government’s approval, which again, was based on Nissan’s backing. An initial delay turned into a second delay, which soon morphed into a postponement of at least five days. That last setback was too much, so FCA officially canceled the deal.

Bigland Whistleblower Lawsuit

While all this was happening, another story emerged that might have helped scuttle the deal. On Wednesday, FCA’s head of Ram truck sales, Reid Bigland, filed a whistleblower lawsuit against his employer. This stunning development comes as the federal government continues to review the automaker’s sales figures.

In particular, the SEC noted that the company reported inflated sales, which could have an impact on investors. In his lawsuit, Bigland charged that FCA pinned the blame on him and withheld most of his compensation in 2018, in part to cover fines it attributes to the executive. The executive is seeking to clear his name and regain lost compensation, reportedly in the millions of dollars.

Bigland is also the only FCA executive to sell all his shares in the automaker. That said, CEO Mike Manley sold $3.5 million in company shares immediately after the FCA-Renault merger was announced. Exactly what the sales figures and share selling have to do with the aborted merger isn’t known, although it adds an interesting wrinkle to the story.

FCA: Moving Forward

With the failed merger now in its rearview mirror, FCA will have to address the Bigland suit and settle with the federal government. It is never a good thing when a top executive files suit, especially one from one someone so influential. Bigland is also the CEO of FCA Canada.

Besides the Bigland suit, the company must continue its focus on two core brands: Jeep and Ram. Jeep has become the company’s star player, driving sales and profits to bolster the company. The automaker plans to build a new manufacturing plant in Detroit, where it will produce a pair of full-size and upscale Jeep models.

The Ram brand is also thriving and delivers its own share of the profits. The redesigned Ram 1500 recently nudged the Chevrolet Silverado out of second place among full-size pickup trucks and continues to garner a larger slice of the sales pie.

Finally, FCA will have to plan a future without another automaker, at least not with Renault. Had it merged with Renault, it would have gained access to the French brand’s electric vehicle platform, saving the company billions of dollars. As it now stands, FCA will bear that cost alone along with the added expense of developing autonomous vehicles in-house.

Fiat Chrysler Renault Merger Talk Heightens

May 28, 2019 by admin 5 Comments

A blockbuster merger of automotive manufacturers may produce the world’s largest automaker, especially if two outside automakers are also brought in. Fiat Chrysler, itself the result of a 2014 merger between European and North American manufacturers may soon tie in with Renault, the French automaker.

Renault is currently reviewing an offer from Fiat Chrysler to merge the two companies with each taking a 50 percent stake in the other. FCA produced 4.8 million vehicles last year to Renault’s 3.9 million, for a combined 8.7 million units. However, Renault is worth 10 percent more than FCA, which means the latter will supply more cash to even the transaction. Renault is worth more in part because of its investment in an alliance with Nissan and Mitsubishi.

Marchionne, the Capital Junkie

A Fiat Chrysler merger with another automaker is something the late Sergio Marchionne insisted must happen to ensure FCA’s long-term survival. The former CEO and Chairman of FCA died unexpectedly last year, never seeing his dream fulfilled. However, it was Marchionne who outlined in his seminal 2015 report, “Confessions of a Capital Junkie,” industry consolidation.

Specifically, Marchionne explained that consolidation is the key to remedying the destruction of capital. In particular, he noted that both regulatory- and consumer-driven improvements such as tighter emissions controls, new powertrains, safety upgrades, infotainment services, and the push to autonomous drive, are expenses difficult for manufacturers to bear, especially those with a lower sales threshold. Further, Marchionne indicated manufacturers would need to sell at least 6 million vehicles annually to remain profitable, something they could accomplish through either a merger, acquisition or by means of a partnership, such as an alliance.

With a combined 8.7 million annual units (assuming the combined entity could maintain its momentum), Fiat Chrysler Renault would easily pass Marchionne’s threshold. However, it’ll take years for real cost savings to kick in as the new entity gradually merges platforms, shares powertrains, and utilizes technologies across the affected brands.

Jeep is the big prize FCA brings to a Renault merger.

FCA and Renault Brands

For FCA, the automaker brings with it several brands, including Jeep, Ram, Chrysler, and Dodge, serving North America primarily. Fiat, Alfa Romeo, and Maserati are especially strong in Europe. As for Ferrari, the Italian sports car brand is now a separate entity and would not be included in the deal.

As for the French automaker, it brings the Renault, Dacia, and Lada brands to the merger. It also owns the Alpine sports car marque and has an 80-percent stake in Renault Samsung Motors, a Korean manufacturer.

By default, Nissan and Mitsubishi are also included as Renault has a stake in Nissan, which has a stake in Mitsubishi. However, much friction exists between Renault and Nissan over the firing and legal detention of Carlos Ghosn, who was the CEO of all three firms. Renault had been pushing for a full-blown merger with Nissan, but the Japanese automaker has fiercely resisted that move. With FCA onboard, Nissan’s stake in the new entity will be diluted, which might impact the alliance.

So Much Potential

An FCA-Renault merger brings with it much promise, but also many risks. Although FCA is successful, the previous DaimlerChrysler model was not. The new entity faces challenges, including bringing different cultures together. Further, France and Italy have vested interests in the industry, with France holding a stake in Renault. In any case, it appears the French government favors the merger.

FCA’s strongest brand is Jeep, which it is quickly transforming from a regional player to an international powerhouse. Indeed, the automaker will likely press forward with a plan to build a new manufacturing plant in Detroit to produce the Jeep Wagoneer and Grand Wagoneer, upscale models designed to take on Land Rover (Discovery and Range Rover series). Jeep’s growth is phenomenal and doesn’t appear ready to slow any time soon.

The Ram brand brings big profits to FCA with the large pickup truck adding a half-million sales annually. The new entity may find fresh markets for Ram, including perhaps Russia where Lada rules.

As for the Dodge and Chrysler brands, the survival of these two marques may depend largely on just how far the merged company plans to extend its reach. Both have had a place in the American automotive landscape, with a limited reach beyond. And both have lost several models over the past few years as FCA emphasizes utility vehicles and trucks over cars.

See Also — Fiat Chrysler Automobiles: No Takers

Emerging Alliances Point to Further Auto Industry Consolidation

March 28, 2019 by admin

What a month! March 2019 may go down as a pivotal time in automotive history as auto industry consolidation talk strengthens anew.

The news is coming from all corners of the globe as multiple players talk, while others forge alliances. Consolidation certainly isn’t anything new, but the future absolutely points to a host of mergers and alliances taking shape.

2019 Ford Ranger — Volkswagen and Ford are forging a pact that might lead to a Ranger-based pickup truck for VW.

Ford, Volkswagen Tie One On

Heading the alliance news this month is a not-yet-signed agreement between Ford and Volkswagen. According to Reuters, the two automotive giants have been in talks for months and appear ready to sign a pact.

That agreement may involve Volkswagen purchasing a stake in Argo AI, which is Ford’s artificial intelligence company. Argo AI represents the blue oval’s autonomous vehicle and artificial intelligence aspirations, a company launched in 2016. Volkswagen doesn’t have an equivalent business, thus investing in Ford’s venture would give it instant access to AI.

At the same time, Ford appears ready to supply Volkswagen with a pickup truck. The German automaker doesn’t have a model for the American market, though its car-based Amarok is sold in multiple markets. Although the type of truck has not yet been identified, we believe a model closely based on the midsize Ford Ranger pickup truck seems likely.

Daimler, Geely Go Beyond Ride-Hailing

Daimler and Geely are expected to soon sign an agreement which would allow the Chinese automaker to purchase a 50-percent stake in Daimler’s Smart small-car brand. Smart has been languishing for years and talk of the brand’s demise emerged just this week.

But Smart may find new life yet as an electric car manufacturer with the Chinese market its main source. The Financial Times reports that an announcement will be confirmed at the Shanghai Auto Show in April.

The two manufacturers are no strangers, although Daimler’s Mercedes-Benz and Geely’s Volvo brands are direct competitors. In 2018, the two companies joined forces to form a China-based ride-hailing company reports CNN.

A Suitor for FCA

The late Fiat Chrysler executive Sergio Marchionne fashioned one of the most unlikely alliances earlier this decade as he married a pair of Italian and American automakers, but he was never satisfied that it would last apart from further consolidation.

Indeed, Marchionne was one of the earlier proponents of global consolidation, noting as far back as in 2009 that there would be “six survivors in the global volume sector.” Marchionne stated his viewpoint during the midst of a worldwide downturn in auto sales that nearly sunk Chrysler and GM and put other manufacturers in jeopardy.

See Also — Auto Industry Buzzword: Collaboration

Marchionne passed away in 2018, but the spirit of FCA consolidation lives on. Notably, in the past few weeks, we have heard that both France’s PSA Groupe (Peugeot, Citroën, Opel, et al) and the Renault-Nissan-Mitsubishi alliance seems interested in acquiring FCA. Jeep and Ram are FCA’s two strongest and most profitable brands and are the top prizes here. At the same time, a merger or an alliance might help FCA improve its performance in Asia, especially in China where it is particularly weak.

But these two possible companies/alliances aren’t the only ones interested in FCA. Several years back the Volkswagen Group targeted Fiat Chrysler, but its overtures were rebuffed. More recently, Hyundai expressed its own interest in the company, but it wasn’t planning to make a move until after FCA’s share values fell.

Limited Agreement Auto Trends

While further consolidation seems likely, more limited agreements between competing manufacturers will continue to emerge.

One of the results of this kind of agreement brought the Toyota Supra back to the market. The Supra’s return comes thanks to an agreement between Toyota and BMW, as the former used the latter’s Z4 platform to build its sports car. Toyota has also worked with Subaru to produce its 86 sports car, and may continue that pact for a new generation model.

Toyota, thanks to its size and deep pockets, may yet avoid the entire alliance and consolidation trend. With stakes in Daihatsu, Suzuki, Subaru, and Mazda, the company can turn to its partners to supply vehicles it doesn’t have. Further, it may work with its associated companies to spread development costs as needed without ceding control.

Isuzu, Toyota Part Ways…Sort Of

August 7, 2018 by admin 4 Comments

Do you remember the Toyota-Isuzu partnership? Probably not, as these two Japanese automakers are at polar opposites in their involvement in the U.S. market.

Indeed, Toyota is one of the top brands in the U.S., while Isuzu hasn’t sold a vehicle here since 2009. Certainly, Toyota dominates in several things, including hybrid technology, but it is weak in a few areas, including diesel engineering, which happens to be one of Isuzu’s strengths.

2017 Fiat 124 Spider. Not Isuzu. — This Fiat 124 Spider is the result of an agreement FCA made with Mazda.

Toyota, Isuzu Forge a Partnership

Thus, in 2006, Toyota and Isuzu signed an agreement to utilize each other’s resources in diesel development, a partnership that made sense at the time. For instance, with fuel prices still high and soon to reach higher still, the original agreement allowed both manufacturers to strengthen their diesel involvement. But as the ensuing years have attested, changes in fuel prices, customer tastes and regulatory concerns have changed things considerably. Diesel demand is down and likely to continue to fall.

So, Toyota did this month what makes perfect sense: it officially dissolved the partnership. Further, Toyota will sell its 50 million shares of Isuzu stock, which gave the company a 5.89-percent stake in Isuzu. Moving forward, the two companies will continue to collaborate on projects feasible to both.

In a press release, Toyota cited the automotive industry’s “sweeping, once-in-a-century changes” as the company’s reason for concentrating on other matters. For instance, the two automakers are likely to continue collaborating on other areas where they are strong. For Isuzu, that would be commercial vehicles. And for Toyota, that’s always been passenger vehicles, this automaker’s mainstay.

2016 Toyota Yaris iA — This Scion iA (now Toyota Yaris iA) is the result of a partnership between Toyota and Mazda.

Toyota and Mazda

Toyota has long collaborated or held stakes in junior Japanese manufacturers, including Mazda, Daihatsu and Subaru. In 2015, Mazda and Toyota announced a partnership whereby Mazda later supplied a vehicle to Toyota based on the Mazda 2. Originally sold as the 2016 Scion iA, this model is currently marketed as the Toyota Yaris iA now that the Scion brand has dissolved.

As for Mazda, the automaker is certain to benefit from Toyota hybrid technology, although as of this writing we haven’t seen such a model in the U.S. market. Toyota might also aid Mazda in all things hydrogen, yet another Toyota strength.

Auto Industry Buzzword: Collaboration

Industry collaboration is growing and will likely expand further as automakers deal with two matters that Toyota described as the “sweeping, once-in-a-century changes.” Specifically, these involve vehicle electrification and autonomy.

In June 2018, General Motors and Honda announced the second component of their earlier agreement, which builds on a joint venture to produce hydrogen fuel cell systems as early as 2020. The latest agreement covers electric-vehicle batteries, which is something GM will supply to Honda, according to Bloomberg. By doing so, GM will lower its own costs as both manufacturers ramp production of electric vehicles.

Waymo Google Chrysler Pacifica — Automakers are also collaborating with tech companies, such as FCA with Waymo.

For Honda, the agreement with GM enables the company to forge a partnership as its chief domestic competitors build their own. We already looked at Toyota’s stake in Japanese manufacturers. Nissan, however, has the most aggressive alliance going as the company has a significant stake in Renault and Renault has a significant stake in Nissan. In 2015, Nissan also purchased a controlling interest in Mitsubishi. The three companies currently form an alliance that sells more vehicles worldwide than any manufacturer.

Other areas of collaboration include GM and Ford working on automatic transmissions for the second time this millennium. In the early 2000s, the two manufacturers partnered to develop the six-speed automatic transmissions which were common in Ford and GM vehicles for more than a decade. Later, the two companies developed new nine- and 10-speed automatic transmissions, which are widely used today.

Getting it Done

So, although Toyota and Isuzu have officially ended their partnership, the collaborations will continue. As with many such efforts, the agreement is usually temporary and is sometimes fluid. As long as both parties see a benefit in working together, then these will continue. After all, lowering costs is the dictum of our day. Finally, consumers will benefit too, as those savings are passed on, making new technologies affordable for most.

Photos copyright the respective manufacturer except for the Fiat 124 Spider, which belongs to Auto Trends Magazine.

Key Facts Surrounding the Nissan-Mitsubishi Alliance

May 13, 2016 by admin 3 Comments

Will Nissan help Mitsubishi bring a new face to the US market? Mitsubishi Lancer Final Edition

If you were one of those people concerned that the latest Mitsubishi scandal would do this automaker in, take heart: the company has been saved by a competitor and current collaborator, Nissan Motors.

On Thursday, the two Japanese automakers signed a Basic Agreement forming a strategic alliance between the two companies. To that end, Mitsubishi is issuing new stock shares, enabling Nissan to claim a 34 percent stake in the company. In effect, the move gives Nissan controlling interest in Mitsubishi, allowing the two automakers to cooperate on a new level.

Here are the key facts surrounding the Nissan-Mitsubishi Alliance:

Nothing comes cheap. Following Mitsubishi’s latest scandal (see The Rise and Fall of Mitsubishi), the parent company saw its valuation plunge by US$3 billion. Nissan is paying 237 billion yen or approximately $2.174 billion for a stake in its junior partner.

Other partners are present. Nissan will hold a large stake in Mitsubishi, but three other major stakeholders will also be present: Mitsubishi Heavy Industries, Mitsubishi Corporation and the Bank of Tokyo. Although all three yield much power, they’re expected to cede to Nissan’s wishes once the deal closes by year end. French automaker Renault is also tied in as part of the original alliance forged 17 years ago.

The current collaboration will expand. Greatly. The current Mitsubishi scandal started when Nissan disclosed that its partner fudged on the fuel economy for the tiny “kei” cars supplied to it by Mitsubishi. Later, it turned out that Mitsubishi had lied on all of its fuel economy figures, but not for cars marketed in the US. That’s a good thing too — with the EPA slapping and fining automakers such as Ford and Hyundai for exaggerating their fuel numbers and slamming Volkswagen for its own emissions scandal, it is doubtful Mitsubishi would survive a US-backed hit. Then again, is there another shoe about to drop here in the states?

It goes beyond cars. Building cars and sharing platforms are one thing, but other synergies are present. The automakers will share technologies, purchasing, jointly utilize plants, and collaborate in growth markets. How this relationship unfolds will yet be determined.

Mitsubishi is over as we know it. The alliance between the two manufacturers mean that Mitsubishi is effectively gone as an independent company. That doesn’t mean the Mitsubishi brand will fade away, but it does mean the two companies will cooperate on platform sharing. The cooperation will probably be heavily skewed to Nissan, except for the tiny cars it has bought and rebadged from Mitsubishi for the past five years.

The US market is in doubt. Platform sharing can mean Mitsubishi’s weak US offerings will go through a renewal. By accepting badge-engineered Nissan Versas, Sentras, and Altimas, along with a handful of SUVs, Mitsubishi may soon fill out its entire product line. But is that a good thing? Nissan doesn’t need to compete with itself, especially in the hard-fought, but profitable US market. Mitsubishi’s strength lies elsewhere, especially in emerging markets. Throwing in the towel in the US might be the best course of action to take, allowing Mitsubishi to follow Daihatsu, Isuzu, and Suzuki through the exits.

The Alliance is now the world’s fourth-largest automaker. Cars sold by Nissan, Renault, and Mitsubishi currently account for 9.6 million units annually, putting this group immediately behind the top leaders. Toyota is still on top with 10.1 million units sold in 2015, followed by Volkswagen at 9.9 million and General Motors at 9.8 million. What an amazing turn around from the late 1990s, when Nissan was on life support and Renault jumped in with a rescue plan.

Is Further Consolidation Possible?

With Nissan snapping up Mitsubishi and Toyota completing its acquisition of Daihatsu, the global auto industry is seeing consolidation continue. Fiat Chrysler wants a partner, but there are no takers. Still, if the right alliance is forged, then even FCA may soon find itself in the arms of a new suitor.

See Also —- Isuzu, Toyota Part Ways…Sort Of

Will Renault Models Replace Fiat Chrysler Products?

February 3, 2016 by admin Leave a Comment

French automaker Renault may have the solution to FCA’s product needs.

If you want to buy a French-built model in the US, you probably know that Renault, Peugeot and Citroen have no presence in the market. Instead, you’ll only be able to consider the Toyota Yaris, the lone model currently built in France and exported to the US.

2015 Chrysler 200. — The current Chrysler 200 may be replaced by a competitor’s model.

Exit…Stage Right

Both Renault and Peugeot-Citroen once had a presence in the US. Indeed, Renault had controlling interest in American Motors for several years, but exited the market in 1989, two years after selling those assets to the Chrysler Corporation. In 1991, Peugeot made its own exit from the US market, ending Citroen sales too. Some twenty-five years later, few Americans under 40 can recall cars built by French manufacturers and sold in the United States.

Neither manufacturer is poised to return to the US, a market that is immensely profitable, but is also brutally competitive. Beyond domestic manufacturers such as Packard, Checker and Studebaker, a host of foreign makes have thrown in the towel too, including Isuzu, Yugo, Daihatsu, and Suzuki.

However, one of the two French manufacturers could make a return, especially if partnered with a company already present in the US. Renault’s logical partner is Nissan, as both companies own a slice of each other and are jointly led by Carlos Ghosn, the Brazilian-born CEO for the two automakers. Its a successful alliance that has produced numerous cars for the two companies since the confederacy was forged in the late 1990s.

On the other hand, Peugeot-Citroen is not so lucky. A brief partnership forged with GM in 2012 was ended less than two years later as Peugeot sought assistance from Dongfeng, a Chinese manufacturer to support its operation. Of the two French companies, Peugeot’s financial picture is the weakest.

Renault to the Rescue?

Turning back to Renault, this automaker could very well find its way back across the Atlantic, especially if Fiat Chrysler works out an agreement for the French automaker to supply it with vehicles. Indeed, FCA CEO Sergio Marchionne announced last week that his company would no longer build its compact Dodge Dart and midsize Chrysler 200 sedans, choosing instead to devote plant capacity to build more Jeeps and Ram pickup trucks. That move means FCA should become more profitable as well as more attractive to a potential suitor.

At the same time, Marchionne said it would turn to its competitors to supply these models, but the likelihood that a Ford, Toyota or a Hyundai would dilute their own model lines to accommodate FCA seems very unlikely.

Renault may be the most logical supplier for FCA as it has two models — the midsize Latitude and the compact Mégane — that might possibly be rebadged and sold in the US. Both models are underpinned by platforms shared with current Nissan products (Altima and Sentra), but otherwise the cars are all Renault.

The downside in choosing the Mégane is that it isn’t a sedan — Renault builds hatchback, coupe and wagon variants, but no four-door sedan. That said, the hatchback might be a fit for a market that is finally accepting this body style again. Currently, Renault builds the Mégane at four plants scattered across Europe and might be in a position to supply the next generation Dodge Dart.

The second model is the Renault Latitude and this one is already sold in Mexico, where it is known as the Renault Safrane. Interestingly, the Renault Latitude/Safrane is built in Korea by Renault Samsung Motors, a minor car manufacturer operating in a market dominated by Hyundai and Kia.

Busan Plant Capacity

Although the Korean company has built more than 2.4 million cars since its 2000 introduction, its Busan manufacturing plant has the capacity to build 300,000 vehicles annually. Supplying the Latitude as the Chrysler 200 in the US and Canada would keep the Busan factory humming and give Chrysler a much-needed product.

Will Renault respond if Marchionne comes calling? There is a good chance that they would. In 2013, Mitsubishi sought a similar tie up with Renault to supply it with a midsize sedan for the US market, but that deal collapsed. In any case, Mitsubishi is barely hanging on in a market where demand for Renault-supplied vehicles would be much smaller than that of a network composed of Dodge and Chrysler dealers.

At the same time, any Fiat Chrysler and Renault relationship could push out further, perhaps including Nissan and forming at least one kind of a business relationship Marchionne desires.

These are interesting times in the auto industry. Then again, the industry is always fascinating.

Renault-Nissan, Daimler Connect in Mexico

July 30, 2015 by admin Leave a Comment

You can’t buy a new Renault in the United States, but Nissan, Infiniti, Mercedes-Benz and Smart brand models are available.

Nissan (Nissan and Infiniti) and Daimler (Mercedes-Benz and Smart) each have a strong presence in North America on their own. Nevertheless, the two competitors are moving forward with an alliance that will produce new models for the Infiniti and Mercedes-Benz marques by means of a manufacturing plant currently under construction in Aguascalientes, Mexico.

Leaders of the COMPAS consortium are overseeing the Mexican alliance.

COMPAS: In the Right Direction

In 2010, Daimler and Renault-Nissan forged an alliance —COMPAS (Cooperation Manufacturing Plant Aguascalientes) — in an effort to build all-new, next generation compact models for the Mercedes-Benz and Infiniti brands. This week, the 50:50 joint venture was officially launched, with Daimler and Nissan each contributing $500 million to build a $1 billion manufacturing plant. That plant will be constructed alongside an existing Nissan facility in Aguascalientes.

The new manufactory is expected to come on line in 2017 and employ as many as 3,600 people directly by 2020 with room to grow as needed. The first Infiniti-based model will roll out in 2017 followed by the first Mercedes-Benz model in 2018.

New, Entry-Level Models From Mexico

Neither manufacturer has specified what models will be produced, but an Infiniti Q20 or Q30 model is reportedly in the offing. Mercedes-Benz may utilize the facility to begin producing its next generation CLA-Class model line.

COMPAS is overseen by a six-member board composed of three members from each manufacturer.

Armando Avila, Manufacturing VP, Nissan Mexico; Carlos Servin, Finance VP, Nissan North America; and Takehiro Terai, Total Customer Satisfaction VP, Nissan North America, are representing Nissan’s interests. Daimler is represented by Michael Göbel, Head of Production Compact Cars, Mercedes-Benz Cars; Axel Harries, Head of Quality Management, Mercedes-Benz Cars; and Christian Schulz, Head of Controlling, Mercedes-Benz Cars Operations.

“COMPAS is an outstanding example of the global reach of the Renault-Nissan Alliance and Daimler cooperation. Together we are combining the manufacturing expertise of Nissan and Daimler in one production plant in Mexico for the production of next-generation premium compact cars,” said COMPAS CEO Kurosawa. “Aguascalientes was selected as the location for this new plant thanks to the state’s well-established supplier base and Nissan’s track record in highly efficient manufacturing in Mexico for more than three decades,” he added.

Although the two manufacturers will build new models based on the same platform, each brand will inscribe their unique countenance on the vehicles sporting their names. The bones may be similar, but everything else about these models will be different.

Mexico is not the only facility that will build the new models. The companies will collaborate elsewhere, harnessing plants in Europe and China as well.

An Alliance of Convenience

The Renault-Nissan and Daimler partnership falls short of a full-blown alliance whereby each manufacturer takes a share in the other. Nevertheless, it demonstrates that automotive manufacturers can forge confederations to accomplish specific tasks. With both sides contributing to the alliance, development and production costs are shared, leading to greater economies of scale.

Nissan and Daimler Sales

US sales for Nissan are up 4.2 percent through June and are up by 8.3 percent for Infiniti. Mercedes-Benz sales are up 9.4 percent year to date, but Smart sales are down 22 percent. However, the 2016 Smart ForTwo is all new, arrives this fall, and should help bolster Daimler’s niche A-segment brand.

Sales for the entire US market are up 4.4 percent through June 2015 and are on pace to top 17 million units. Softening demand for cars comes as consumers snap up utility vehicles and pickup trucks in greater numbers.

Autonomous Driving: Well, Not Exactly

July 21, 2014 by admin Leave a Comment

Autonomous driving is one of the buzzwords that piques the interest of futurists. Just the thought of driving from Point A to Point B while taking a nap has some people clamoring for the technology. Certainly the safety aspect is important too, thus insurers, regulators and manufacturers are also advocating for driverless cars.

One of the automotive executives at the forefront of advancing autonomous drive is Carlos Ghosn, president and CEO of Nissan Motor Co., Ltd. His self-driving vehicle pronouncements have been carefully followed, including what plans the Renault-Nissan alliance has to further this initiative.

Well, Ghosn has clarified his earlier remarks, dialing down expectations in the process. No Nissan-built model will drive itself in 2020, the year when Ghosn had earlier pegged for bringing the technology to the market.

Autonomous Driving Lite

Nissan autonomous driving Instead, Nissan plans to offer automated lane controls and highway traffic management systems, what will be introduced over the next four years. In essence, Nissan is taking a more conservative approach as it progressively rolling out technologies in advance of full-scale driverless cars.

By the end of 2016, Nissan will make available the next two technologies under its autonomous drive strategy, said Mr. Ghosn. We are bringing to market a traffic-jam pilot, a technology enabling cars to drive autonomously – and safely – on congested highways. In the same timeframe, we will make fully-automated parking systems available across a wide range of vehicles.

Ghosn presented Nissan’s goals in a speech to the Foreign Correspondents Club of Japan, last Wed. He said that the initial technologies will be followed by intersection-autonomy, what will permit vehicles to “negotiate city cross-roads without driver intervention.” Even so, Ghosn noted that “self-driving cars remain a long way from commercial reality.”

Overcoming Regulatory Hurdles

The Nissan executive admitted that there are quite a few hurdles to overcome before full-blown autonomous driving can become a reality. He noted that a “regulatory minefield” remains a huge obstacle, one composed not just of many nations, but various states and local jurisdictions that each have their own say.

Choosing the term “regulatory minefield” speaks volumes as it sends a signal that even with the technology ready to go, government approval will slow it down.

Four Major Trends

Ghosn outlined what he says as “four major trends” that would drive demand for autonomous drive technologies, as well as increase interest in zero-emission vehicles such as the Nissan LEAF, and greater in-car connectivity. The four trends are:

“(First), …the rise of global mega-cities, which is increasing the need for innovations to ease congestion, reducing emissions and improve traffic management.

Second, demand is growing for in-car communications that meet or exceed the high expectations of the digital generation. Our vehicles must be as connected as the smartphones and tablets that this generation depends upon day in and day out.

Third, there is the need to bridge the generation gap by providing vehicles that appeal to the worlds growing population of seniors. These consumers want technologies and automated systems that enable them to drive safely, for longer.

“Fourth s the pressing need to embrace gender diversity. This means recognizing the vital role that women play as consumer-purchasers, decision-makers and managers throughout the car industry.

Enhanced Communications

For its part Nissan expects to equip more than 1.5 million of its vehicles with enhanced communications by next year, by making use of cloud-based systems that provide improved access to social media, entertainment apps, and voice recognition software.

Said Ghosn, “We will continue to make our cars more connected. We plan to lead in delivering Autonomous Drive vehicles. And, in every part of the business, we are recognizing the unique needs of elderly drivers and the impact and influence of female customers.

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Carlos Tavares Named PSA Peugeot Citroen Head

November 28, 2013 by admin 1 Comment

Up until three months ago, Carlos Tavares was the chief operating officer for Renault, the French automaker in alliance with Nissan. Tavares left the company in Aug. after Bloomberg published an article that quoted him as saying that he would like to run another automaker as Renault/Nissan CEO Carlos Ghosn apparently wasn’t going anywhere.

Those words probably didn’t sit too well with Ghosn who at 59 wasn’t ready to relinquish the reigns to Tavares, 55, or anyone else for that matter. Although he was soon out of a job, Tavares was expected to land safely elsewhere, perhaps leading GM or Ford, two companies he has expressed interest in.

PSA Peugeot Citroen

Earlier this week Tavares did land on his feet when rival PSA Peugeot Citroen announced that he will join the company’s management board effective Jan. 1. Later in the year Tavares will replace current PSA CEO Phillippe Varin, who plans to retire.

Peugeot is the second largest car manufacturer in Europe after Volkswagen. The French government and GM own stakes in the company, but the automaker has also been seeking a partnership with Dongfeng Motors, a Chinese manufacturer. In Oct., Reuters reported that PSA Peugeot Citroen was preparing a 3 billion euro (US $4.1 billion) capital increase with monies contributed equally by the French government and Dongfeng, itself owned by the Chinese government.

China’s Dongfeng Motors

Through the originally proposed financial initiative, both Dongfeng and the French government would each gain a 20 to 30 percent stake in PSA. The move would also cause the Peugeot family to lose control of the company as its 25.4 percent stake and 38.1 percent voting share would be reduced. GM’s own 7 percent share would also be diluted once an agreement was made. However, later reports have indicated that Dongfeng is not interested in retaining a stake larger than 10 percent as reported by Automotive News Europe.

Regardless of the number of shares taken, Peugeot has little choice to look for outside help as the company continues to get hammered in the weak European market where its strength lies. PSA has a presence overseas, but it is absent from one important market: North America. Despite its relationship with GM or perhaps because of it, the Peugeot and Citroen brands are not likely to return to the US market, last served more than two decades ago.

Slumping European Market

Peugeot has been mired in a slump for six years as the European market continues to suffer high unemployment and weak growth, especially in western nations. Tavares brings with him more than three decades of automotive experience at Renault, culminating as Ghosn’ second-in-command. Tavares had planned to add both sports car and luxury brands to Renault before he left, moves that could have raised Renault’s global visibility.

Tavares comes to a money losing operation, one that has seen its automotive unit lose 510 million euros (US$691.7 million as of publication) during the first half of 2013. Returning to profitability will require additional sacrifices, what Varin has already required by closing manufacturing plants and through the elimination of more than 11,000 jobs. The French government is eager to stem job losses, as unemployment has been rising steadily moving from 9.5 percent in late 2011 to an estimated 11 percent today.

Tavares is a native of Portugal and speaks French fluently. Thus, heading to Peugeot keeps him in a market he knows well and removes his name from potential successors at GM and Ford. Both US automakers have several of their own executives that might step up when Dan Akerson (GM) and Alan Mulally (Ford) retire. But in the automotive industry job hopping is not only expected, but it is especially required for executives seeking to move up.

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