Why Carlos Ghosn fleeing to Lebanon could actually be good news for Nissan – and perhaps Britain too

At the very least the Nissan-Renault alliance will have to be redrawn to reflect the reality that the Japanese firm is inherently the stronger partner

Ghosn leaving his lawyer’s Tokyo office in April (Reuters)

Carlos Ghosn’s flight to Lebanon may or may not turn out to be a good choice for him personally, but it may be very good news for the future of Nissan – and perhaps for Nissan’s operations in Britain.

The starting point here is that Ghosn, backed by Renault, saved Nissan. Nothing that has happened since his arrest can take away from that achievement. But in recent years he became the advocate for the French side of the partial merger of the two companies, in effect allowing Renault to milk Nissan for the funds to keep it going. For the past decade, at least until this year, Nissan made more profit than Renault. Yet it was the junior partner in the relationship, owning only 15 per cent of Renault, while the French side owned 43 per cent of Nissan.

Japanese fears that Ghosn was the voice of France were confirmed when the immediate reaction of the Renault high command to his arrest was to question the reasons for his detention. Only as the case against him was revealed did French support fade. Ghosn denies any wrongdoing.

So what happens now?

Well, at the very least the alliance will have to be redrawn to reflect the reality that Nissan, despite its current difficulties, is inherently the stronger partner. Renault lacks clout outside Europe, while Nissan has a still-powerful brand in the US. But changing the financial and governance arrangements of the union may be impossible. Whatever trust that might have remained has been blown to bits by Ghosn’s flight. Whatever you might think of the Japanese legal process, by refusing to submit to it and doing a runner, he has made sure that the Japanese elite will never trust the French again.

A break-up will be complicated, in part because the cross-holding structure of Nissan and Renault was designed to make it difficult, but equally because another Japanese manufacturer, Mitsubishi, is also part of the alliance. But any financial arrangement can be unscrambled, and the balance of probability must be that this one will. The only lasting way I can see the relationship going forward would be to have some technical cooperation, but nothing more.

So how might Nissan’s future, probably in association with Mitsubushi, pan out?

It has a big problem in the short term. It has just produced its worst results for a decade and is cutting production and staff. It is small comfort that the entire global motor industry is in trouble too. It has particular problems in the vital US market, where its reputation has slipped a little from the stellar levels of a few years ago. But it has a strong reputation for engineering excellence, is a pioneer in electric cars with the Leaf, and has some important new designs in the pipeline. It is hard to be sure, but the connection with Renault may have become a burden on its development process and hence a drag on its performance.

All this matters to the UK. Nissan pioneered the assembly of Japanese cars in Britain, and did so at a time when the British motor industry was in catastrophic decline thanks in part to bad labour relations but also weak product development. But between two-thirds and three-quarters of its cars made in Sunderland are exported to Europe. That may become more difficult, whatever the outcome of the Brexit trade negotiations. With the European car industry having gross overcapacity, and with France still the senior partner of the alliance and calling the shots, it is not hard to see which plants would be most likely to get the chop.

Actually it was Carlos Ghosn, who back in 2002, threatened to quit the UK if Britain did not join the euro. On that occasion he was overridden by the Japanese executives, who had made such a huge success of their UK investment and didn’t want to let it go.

To be clear, sentiment will not keep Nissan in the UK if the economics don’t stack up. But the spectacular departure of Carlos Ghosn has made the Japanese authorities look foolish. His criticism of the Japanese legal system reinforces their suspicions and their fury. From now on, providing the UK can make a viable business case, it will be listened to in Japan. France won’t.