Posted by: Ian Rowley on October 26, 2006
As expected, Nissan’s financials for the quarter ending Sept 30, announced today in Tokyo, weren’t great. Operating profits were down 4.9% for the quarter and sales slipped 0.9%. But the performance of CEO Carlos Ghosn was peerless. In a sturdy defense of Nissan’s recent performance, Ghosn promised that Nissan will still deliver a seventh consecutive year of record growth and sales. Ghosn also pointed out that most automakers would be rather pleased with Nissan’s operating margin, which was 8.4% over the last quarter. That’s a clear dig at critics in Japan who have been asking whether Ghosn’s still has the magic touch.
The highlight of Ghosn’s routine, though, was answers to questions on the failed alliance talks between Nissan, Renault (which owns 44% of Nissan) and GM. Ghosn was clearly prepared. He had a chart on hand which detailed just how successful the alliance between Nissan and Renault has been. It showed that in the seven years of the alliance, the Japanese automaker’s market cap has grown fivefold and Renault’s by three times. Combined the two firms’ market values are now four times higher than in 1999. “This for me is proof that [the alliance] is a competitive advantage and, if you manage it well, you can create a lot of value,” Ghosn told reporters. Ghosn has a point. The market cap of American automakers’ combined was down 61% during the same period.
But what of GM’s complaint that Nissan-Renault stood to gain more than them from the proposed alliance? “Naturally, the people who are extremely motivated about developing synergies are probably going to find more synergies than people who are less motivated,” Ghosn said. The implication being GM could have found more if they’d wanted to but was down on the alliance from the beginning. “From our point of the view the synergies were substantial. They were not minor numbers.”
Ghosn also reiterated that he’s still open to talking with another North American automaker, should one come knocking. “The bottom line for us is that there is a lot of value in us developing an alliance [and] we already have a European partner and we already have an Asian partner,” Ghosn said. “If [there’s] an alliance offering major synergies benefiting Renault and benefiting Nissan, I cannot just ignore it.” One wonders how long other automakers can ignore Ghosn.