Ghosn in 60 seconds: How auto industry's top gun skidded into misfortune

Ghosn had earned the title of ‘a turnaround specialist’ even before he moved to Japan. Following Renault’s failed merger with Volvo, the French company had decided to shut some European factories to cut costs in the late 90s with ambitions of a ‘20 billion Franc cost reduction plan’.

Renault’s financial health improved dramatically in 1999 just as it bought a 43 percent stake in debt-laden Nissan. The non-Japanese, non-French Ghosn demolished the age-old management structure at Nissan which he believed led to communication gaps leading to delays. He replaced that structure with cross-functional teams. Both Renault and Nissan closed last year with record profits.

Two years ago, Ghosn widened the alliance bringing on board one more sick Japanese company Mitsubishi. Nissan bought a 34 percent stake in Mitsubishi which got embroiled in a controversy involving manipulation of fuel economy data.

India

Ghosn was one of the earliest of modern day entrepreneurs to consider investing in India. Ghosn forged several partnerships with local Indian automotive companies for developing new class of vehicles ranging from a Tata Nano rival to a mini truck.

Renault entered India after partnering Mahindra & Mahindra in 2005 to make the Dacia Logan (rebadged as Renault Logan). A few years later Renault and Nissan joined hands with Bajaj Auto to develop a low cost car that would rival the Nano.

Ghosn did not stop there. He even managed to bring on board Ashok Leyland to develop a mini truck called Dost. Ghosn even managed to get the heavy truck maker to enter the passenger van segment despite having zero experience in this segment.

Ghosn famously coined the term ‘frugal engineering’ after he was impressed by Ratan Tata’s resolve to deliver the low-cost car Nano at the price point the Tata Group patriarch promised.

Missteps   

One-by-one all three of Renault’s ventures in India failed miserably. Each of its partnerships had to be dissolved following either poor demand for its products or difference of opinion with the promoters of local companies. Ashok Leyland even dragged Nissan to court over violation of local licensing conditions and breach of partnership agreement

Ghosn was also responsible for bringing brand Datsun back from the dead. He believed in the theory of fighting with Datsun’s pocket friendly models against leader Maruti Suzuki while keeping brand Nissan in the premium space to deal with Honda and Toyota.

The plan has back fired though with Indian buyers outrightly rejecting Datsun despite its range priced lower than competition. The combined monthly sales of all of Datsun’s three models (Redi-Go, Go and Go+) is less than the sales of lowest-selling model of Maruti Suzuki (S-Cross).

Nissan too has had no success in India with its present sales count being lower than that of Datsun. Limited retail reach, no locally developed products, dealer service issues hit Nissan dearly in India.

Renault has remained the most successful of the three brands in India though the French company has failed to keep the momentum going. The Renault Duster became the highest selling SUV in India a few years ago but today does not even feature in the top five list. Renault’s other best-seller Kwid met with a similar fate. After the initial surge Kwid volumes fizzled out subsequently despite low competition.