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Nissan-Renault boss Carlos Ghosn attempted to oust Nissan’s CEO before his arrest, Elon Musk is mad online at 60 Minutes, auto shows are trying to evolve and much more on The Morning Shift for Tuesday, the 11th of December, in 2018.
1st Gear: You Win or You Die
I don’t know how much you readers really care about the palace intrigue at Nissan-Renault-Mitsubishi that deposed Carlos Ghosn and landed him in a Japanese jail. If clicks are any indication, not that much. But it really is one of the most bizarre and unexpected stories to happen in the car business in some time, and it got even weirder over the weekend with this Wall Street Journal scoop.
But word on the street is that the Nissan side of things hasn’t been happy with him, the Alliance, or a planned proper merger between Renault and Nissan, for some time. Now Ghosn’s out and potentially facing years in prison as these revelations come to light at just the right time. What gives?
Now we learn from the WSJ that, in recent months, Ghosn had been planning to remove Nissan CEO Hiroto Saikawa as part of a larger management shakeup—all while Ghosn himself was being investigated both internally and by Japanese prosecutors. Hmmm!
Carlos Ghosn was planning to replace the company’s chief executive before the plan was derailed by Mr. Ghosn’s arrest in Tokyo last month, according to people with knowledge of the matter.
Word of Mr. Ghosn’s plan adds a new twist to the drama inside Nissan. CEO Hiroto Saikawa has said the company was investigating possible misuse of corporate assets and other alleged wrongdoing by Mr. Ghosn for months this year and was supplying information to Tokyo prosecutors.
While that internal investigation was going on, Mr. Ghosn was growing increasingly dissatisfied with Mr. Saikawa’s handling of business problems at Nissan including a slowdown in U.S. sales and repeated quality issues in Japan, say people familiar with the matter.
Though Saikawa was Ghosn’s hand-picked successor for the top Nissan job, according to the Journal the two clashed over strategy, specifically how much money to dump into the electro-autonomous future like everyone’s doing right now:
Mr. Ghosn believed that only the largest car makers would survive in a future of self-driving and electric cars, and he said the alliance of Nissan, Renault and Mitsubishi Motors Corp. should seek to sell 14 million cars by 2022, up from 10.6 million last year.
“With the explosion of technology that is coming, it is going to make it very difficult for smaller players to follow,” Mr. Ghosn told The Wall Street Journal in September 2017.
Two months later, Mr. Saikawa offered a different perspective at a news conference, saying Nissan’s efforts to expand volume were eating into profitability.
“Of course, everyone wants to see how big the company will be eventually, but the most important thing for a company is cash flow,” Mr. Saikawa said.
I’m not saying Ghosn got whacked, necessarily. I’m just saying the timing of all this is extremely weird! When you play the Game of Thrones you win or you die, and Ghosn is definitely dead now.
Or the next-closest thing, which is maybe going to prison in Japan.
2nd Gear: Nissan to Correct Earnings Now
Naturally, this all means Nissan has to file corrected earnings statements for several years under which Ghosn was allegedly not reporting his substantial income, reports Automotive News:
Nissan will file corrected earnings for past years in which Carlos Ghosn, the company’s ousted chairman, allegedly under-reported his compensation by tens of millions of dollars.
Ghosn, aide Greg Kelly and Nissan itself were indicted the same day for allegedly making false securities disclosures by understating Ghosn’s income by some 5 billion yen ($44.3 million) during the 2010-14 fiscal years. That amount was set aside as deferred remuneration to be paid to Ghosn at a later date, such as after retirement, people close to the matter said.
Even more interesting is this tidbit, which will be key to Ghosn’s defense:
Ghosn’s lawyers, who have said the prosecutor’s case is flawed, filed an appeal to overturn the detention midday Tuesday, but it was rejected by the court by evening, Reuters reported.
A key leg of Ghosn’s defense is that the amount of deferred pay had yet to be finalized, thus there was no obligation to report it, Japanese media have reported.
President Donald Trump has us staring down the barrel of a potential trade war with China, but now China says it’s moving toward cutting way back on tariffs on cars made in the U.S. If this happens it’s a major win for Trump, and auto stocks are already creeping up this morning. Via Bloomberg:
China is moving toward cutting its trade-war tariffs on imported U.S.-made cars, a step already claimed by President Donald Trump as a concession won during trade talks in Argentina.
A proposal to reduce tariffs on cars made in the U.S. to 15 percent from the current 40 percent has been submitted to China’s Cabinet to be reviewed in the coming days, according to people familiar with the matter. Shares of carmakers including Daimler AG, Ford Motor Co. and Tesla Inc. rose on the news.
The step hasn’t been finalized and could still change. While reversing the retaliatory duty is a major climb-down by Beijing, it could re-focus the two sides toward implementing the trade-war truce agreed earlier this month. Relations have since been shaken by the arrest of Huawei Technologies Co. Chief Financial Officer Meng Wanzhou in connection with sanctions violations.
“Last week, events seemed to conspire to throw the truce into disarray, but the underlying incentives of both sides at the moment are to try to maintain that truce,” Freya Beamish, chief Asia economist at Pantheon Macroeconomics Ltd. “Now we are seeing the possibility that China will come through with reductions of tariffs on U.S. autos and that’s another good, concrete step.”
Let’s hope it happens for real, as it’d be good news for the American auto industry.
4th Gear: Elon’s Mad at 60 Minutes
Tesla boss Elon Musk isn’t happy with his 60 Minutes interview on Sunday, and on Twitter (of course) accused the news show of cherry picking his quotes and selectively editing the hours of footage they shot:
Is there a version of reality in this great, vast multiverse of ours where Musk would’ve been happy with how his 60 Minutes bit turned out? He’s infamously clashed with the news media at every opportunity, usually after he puts his foot in his own mouth. Like how he said he doesn’t expect Tesla’s new chairwoman to rein him in at all, via Bloomberg:
Teasing its interview with the Tesla founder, “60 Minutes” tweeted that Musk had replied “No” when asked if he wanted to return to the role. Musk called the tweet misleading because it didn’t include his full response to the question. His full reply was: “No. I actually just prefer to have no titles at all,” according to footage of the interview.
Musk relinquished the post of Tesla chairman last month under a settlement with the Securities and Exchange Commission over his tweeting in August about trying to take Tesla private. In the “60 Minutes” program, Musk said that he handpicked the new chairman Robyn Denholm and that it was unreasonable to expect her to watch over him.
“That’s not realistic,” he told the program. “I am largest shareholder in the company and I can just call for a shareholder vote and get anything done that I want.”
It’s like, hello, First Amendment.
5th Gear: An M Boss Rises At Hyundai
Speaking of management shuffles, that’s happening right now at Hyundai Motor Group, reports Automotive News:
Hyundai Motor Group’s two vice chairmen in charge of r&d have offered to resign, three people familiar with the matter told Reuters on Tuesday.
Albert Biermann, r&d president, is likely to be named chief of the division, two of them added, declining to be named as they are not authorized to speak to media.
The reshuffle is one of the most high-profile shake-ups since Hyundai promoted heir-apparent Euisun Chung in September to executive vice chairman, moving him a step closer to succeeding his octogenarian father as head of the country’s second-largest group.
The South Korean group has since appointed new heads of product strategy and design, and created two entities to develop future technologies, as it battles plunging profits and sagging share prices.
Here’s why that matters: Biermann used to be the lead engineer at BMW’s M division until he got poached by Hyundai, and he’s helped spearhead the effort to make fun Hyundai performance cars, like the Veloster N and the objectively excellent Genesis G70. I’ll take him moving up in the R&D world there as good news.
Also, this happened:
In October, Thomas Schemera, also a former BMW executive, was appointed to lead product planning for autonomous cars, connected and electrified vehicles, while Luc Donckerwolke, a former Bentley design chief, was named design division lead.
Good things happening at Hyundai these days.
Reverse: Robert Moses Was Bad
Neutral: Will Ghosn Really Go To Prison?
Place your bets, people. What’s gonna happen here?