Global Courant
Nissan was dealt another blow last week when word leaked to the Financial Times that Ashwani Gupta, the chief operating officer and number two in command, was being pushed out in what appears to be another palace coup.
Gupta, 52, will officially step down on June 27 after a short and unremarkable career with the automaker. Gupta previously held leadership roles at Renault and Mitsubishi Motors and was named COO on November 1, 2019, replacing Yasuhiro Yamauchi in a management change that took effect December 1 and also elevated Makoto Uchida to president and CEO.
Nissan was forced to make changes after losing its top three executives – first Carlos Ghosn and Greg Kelly as part of a management coup in November of the previous year, 2018, to block the merger with Renault, and then CEO Hiroto Saikawa at the September 2019 Board Meeting for receiving a windfall of yen 47 million from a retroactive shareholder appreciation rights (SAR) bonus.
Another recent twist in the ongoing Nissan saga: Ghosn has sued the company for $1 billion in a Lebanese court. Lebanon has been where he has lived since he fled Japan while out on bail pending trial on criminal charges, which he and his lawyers say (with strong evidence to support them) were part of a Nissan-led coup d’état. management faction, aided and encouraged by elements of the Japanese government.
The house of Carlos Ghosn in an affluent neighborhood of the Lebanese capital Beirut. Photo: Global Courant Files/AFP/Anwar Amro
Ghosn, Kelly and Saikawa were all representative directors at the time of Ghosn and Kelly’s arrests on November 19, 2018. Nissan had three representative directors (daihyo torishimayaku in Japanese) on its then nine-member board of directors. In June 2019, the automaker expanded its board to 12, the majority of which came from outside the industry, as the board shifted its focus to governance.
Only three directors, including Gupta and Uchida, came from the industry. Now it will be two. The current frontrunners to replace Gupta, according to our sources, are Guillaume Cartier, chairman of the management committee that directs Nissan’s operations in Europe, India, the Middle East, Africa and Oceania, and Jeremie Papin, president of Nissan North America Inc. . and Chairman of the Executive Committee for the Americas Region.
Guillaume Carter. Photo: Nissan
Cartier is considered the best choice.
Elevating one of them to the board of directors would require an extraordinary shareholders’ meeting, as the agenda for the June 27 meeting has already been set and includes the addition of a new external director and the retirement of two, bringing the total comes to 10.
In addition, market share fell to 5.5% in the US and 2.1% in Europe.
In fiscal 2017, Ghosn’s last full year in management, Nissan’s share of the two markets (including Infiniti sales) was up. Meaning: The automaker has lost ground to the competition.
Global market share fell to a 50-year low of 4.1%. And while Nissan is profitable again, with an operating profit margin of 3.6%, its margin is lower than any major automaker outside of China except Honda and, in Honda’s case, only if one excludes its profitable motorcycle business.
So it’s difficult to judge Gupta’s tenure, because the company is not only profitable again, but also generating positive cash flow, with an estimated 1 trillion yen in the bank.
For that reason, questions remain as to why Gupta is being removed. We have contacted Nissan and have not received a response.
However, the FT reported that Gupta was competing for the CEO job. We were told Gupta wasn’t shy about promoting himself, but we never interviewed him. On the other hand, Nissan had co-CEOs (Saikawa and Ghosn) from October 2016 to March 2017; Ghosn moved up to chairman in April. So there is a precedent for sharing title and dividing responsibilities.
The FT also reported without offering details that there were “complaints” against Gupta. Given Nissan’s history of leaking negative information about Ghosn, we believe such reports should be taken with skepticism.
It was on May 18 (first reported on Tuesday of this week by Blooomberg) that Ghosn filed a $1 billion damages suit in Lebanon against Nissan and 12 executives, including Harry NadaMasakazu Toyoda and Motoo Nagai.
All three, the last two as outside directors, were involved in planning the coup and/or the cover that followed.
Nagai, who chairs the board’s audit committee, halted the internal investigation when Christina Murray and Ravinder Passi, Nissan’s global compliance chief and global general counsel, turned their attention to Nada, who had signed an immunity deal with the Tokyo prosecutor’s office for several weeks. . before Ghosn’s arrest and never informed the board.
Nada is still a corporate officer with the title of senior vice president. Nagai, who was allegedly involved in Gupta’s impeachment, remains on the board. Toyoda, a former government bureaucrat, retires.
A more likely reason for Gupta’s removal, according to our sources, is that Renault wanted him out. According to our sources, Gupta did not respond to Renault’s demands following changes to the alliance structure in February, under which all decisions must be made by mutual consent.
Though considered the most talented automotive executive on Nissan’s board of directors, he took a hard line with his former employer. Gupta joined Renault in 2006 and moved to Mitsubishi Motors (the third member of the alliance) in 2019 before joining Nissan.
Some of the contentious issues include Nissan’s extensive intellectual property, which Renault wants more access to, and Nissan’s active involvement in Renault’s Ampere EV project, including taking a 15% minority stake.
Concept of the Renault Ampere. Photo: Motor.es
Moving forward with the project, Renault announced this week (June 19) that its CEO, Luca de Meo, will be Ampere’s future chairman and CEO. De Meo will hold both positions, while Renault chairman Jean-Dominique Senard is tasked with setting up a committee to oversee the IPO. Senard, a former tire industry executive, is concurrently vice chairman of Nissan’s board of directors.
According to one of our sources, Uchida is seen as “smoother” than Gupta.
Looking at the market, it’s not clear how Ampere will benefit Nissan. The Japanese automaker’s main markets outside Japan are China and the US, not Europe. And according to EV Volumes, both automakers have seen their EV shares fall below 2% globally.
CLSA analyst Chris Richter warns:
If Gupta’s misgivings about investing in Ampere and keeping Nissan’s IP safe were really behind his departure – admittedly, the FT article also raises other issues – then we would note that many of Nissan’s minority shareholders share the same concerns and we wondering how strongly independent board members who allegedly were behind his removal are serving Nissan’s minority shareholders….
Optics of the Gupta situation are truly appalling as they focus on the wrong things: palace intrigues, investigations and underhandedness. They also ignore the fact that Nissan has powerful competitors. While the industry is undergoing the biggest change in a century – it will be difficult for anyone in the industry to survive – Nissan is wasting time.
I’m afraid they won’t be able to hire someone with the same competence. Nissan has a lot of work to do and the competition is not waiting for that. Gupta has been the driving force behind Nissan’s progress in profit, new products and electrification….
Cash flow has continued to improve. That has been good news. It means their transformation plan is working and they seem to be on the road to recovery (but) Nissan is not taking advantage of this kind of instability. Gupta’s loss is significant.
Roger Schreffler is a nearly four-decade veteran of Japan’s auto correspondent and former president of the Foreign Correspondents’ Club of Japan.
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