From India’s point of view, Ashwani Gupta’s imminent exit as Chief Operating Officer of Nissan Motor is not likely to create any serious disruptions going forward.
“The show will go on and all the new products will be launched as planned,” a top industry source told Mobility Outlook. Gupta had visited India in February to discuss the investments of INR 5,300 crore while driving home the message that the Renault-Nissan alliance would take the growth story to the next level.
Yet, his decision to call it a day at Nissan has caused a great deal of speculation with international media reports suggesting that there were some internal issues at play which prompted this decision. The Japanese automaker is scheduled to announce his replacement on June 27 which will also be Gupta’s last day at the company.
Quite unlike the last four years, the transition in leadership is not expected to cause any upheavals since the Renault-Nissan partnership is on a stronger footing today even while speculation is rife that there are still some issues that need to be sorted out. Yet, this is quite trivial compared to the years following Carlos Ghosn’s dramatic arrest in November 2018 which were marked by turmoil and chaos.
Carlos Ghosn Era
The former Chairman of Renault-Nissan was the face of the alliance and was clearly the monarch of all he surveyed. He was the one who pulled off the acquisition of Nissan decades earlier when he still was not the CEO and its dramatic success catapulted him to be the poster boy of Japan and in good time the global automobile industry.
Ghosn was indeed larger than life in his heyday when everything he said would be eagerly lapped up by a smitten audience. This aura of invincibility crashed five years ago when he was arrested in Tokyo and whisked off to jail. The fact that it was Nissan which planned this dramatic turn of events was the first serious blow in the alliance with Renault. It caused a lot of bitterness along with deeper levels of distrust and suspicion between the partners.
While Ghosn was cooling his heels in jail, the partners seemed clueless about the road ahead. There were significant changes in leadership followed by efforts to reduce the tensions and get back on track. There was another big upheaval en route when Fiat Chrysler Automobiles (FCA) reached out to Renault for a merger which apparently did not go down too well with Nissan. Ghosn had actually planned this when he was Chairman but this time around, the opportunity was lost and FCA promptly turned to Groupe PSA paving the way for the creation of Stellantis.
Nissan was also struggling financially and announced a massive cut of 12,500 jobs in mid-2019 which only made things a lot worse for the alliance. However, there was now a serious effort to rebuild the battered house and bring things back on course. This was the time important leadership changes were made at both companies which included bringing on board Ashwani Gupta, who was then with Renault, as the new COO of Nissan.
Scaling Down
It wasn't as if things improved overnight but there was now a realisation that some ambitious plans had to be scaled down. When Ghosn was on top, he was aiming for the sky and there was a time when the Renault-Nissan combine was neck-and-neck with Volkswagen for the top carmaker slot worldwide. This frenetic pace of growth and ambitious plans were now put on the back burner since survival was way more important than just targeting big numbers and market share.
Ambitious projects like Datsun, which just did not take off in emerging markets like India were shelved, and growth projections pruned to cope with the new global realities following the COVID outbreak. The world was in a more volatile state with Russia declaring war on Ukraine and China turning the heat with India. Beyond the challenges of the pandemic, the automobile industry now had to gear up for new frontiers like electrification that would involve massive investments.
Back home in India, Nissan finally hit pay dirt with the Magnite SUV after a series of product failures. Its partner, Renault, had done a lot better in establishing brands like Duster, Kwid, Triber and Kiger but the volumes were still elusive. Clearly, there was anxiety about the road ahead even while the allies were putting in place a new recast plan which would see Nissan getting a more prominent role in the alliance.
Raw Deal
It is no secret that the company was smarting for years at what it perceived as getting a raw deal from Renault in the decades-long partnership. It was no longer the weak and vulnerable entity which Ghosn had turned around soon after the buyout by its stronger French ally. The fact that Nissan held only 15% in Renault (against the latter’s 43% in Nissan) combined with lack of voting rights was enough to raise its hackles especially when it had grown stronger over the years.
In fact, reports even suggested that Ghosn was arrested not solely for financial misconduct, as alleged by Nissan, but for the fact that he was working on a merger of the Japanese brand with Renault. This was the last straw for the company and relations took a nosedive with Ghosn out of the picture and the cosy picture of togetherness with Renault now threatening to fall apart.
Fortunately, sanity and pragmatism prevailed and in this new era of electrification and mobility disruption, the partners worked out a recast plan which would see Renault prune its stake in Nissan to 15% with the Japanese company now having voting rights. Mitsubishi, which was also roped into the alliance in 2017, would also become a key player of this three-way partnership.
Recognising India
The good news was the recognition of India as a strategic region of growth which was a huge relief especially in the context of big brands such as General Motors and Ford exiting the landscape. Renault-Nissan clearly found greater merit in India’s role especially when all carmakers worldwide were exiting Russia following its unprovoked aggression on Ukraine.
Being of Indian origin, Ashwani Gupta was a familiar face in India and the fact that he had personally come to discuss the roadmap for Renault-Nissan was even more reassuring at least from the viewpoint of optics. It is quite natural to press the panic button when a COO quits but things are a lot better at Nissan now which augurs well for the Indian operations with Renault, at least for now. Tomorrow is another day.
Also Read: