Carlos Ghosn on Detroit and the Future of the Auto Business

"Everything is lined up…toward consolidation of the industry. But are you going to be able to get the money you need at a reasonable cost?"

By Maria Bartiromo

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Nissan COO Toshiyuki Shiga with the Cube, which will hit the U.S. and Europe in 2009 Itsuo Inouye/AP Photo

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Carlos Ghosn, the CEO of both Renault of France and Nissan (NSANY) of Japan, needs little introduction. He is widely seen as one of the most innovative and strategic thinkers in the car business. On Nov. 19, as the heads of GM (GM), Chrysler, and Ford (F) concluded testimony before a U.S. congressional committee considering pleas for a bailout, I talked with Ghosn about rescuing Detroit and the future of the global auto industry.

MARIA BARTIROMO

Do you support a bailout for the Big Three?

CARLOS GHOSN

A part of the bailout has already been decided—the $25 billion to make the industry more fuel-efficient. It's the right thing to do because the car industry by itself cannot find enough financing to do that alone. We have asked European governments and other governments to do the same thing. So this we support 100%. For the rest of it…we have no opinion.

But you're an industry insider. Wouldn't it be better to have some capacity go away? Jack Welch suggests in this week's BusinessWeek that both GM and Chrysler should declare bankruptcy and reorganize with the support of Washington.
Anything I say is going to be considered as partisan, and justly so, because I'm involved in the industry. Jack Welch is not involved in the industry: He's an outside observer. He can talk about the industry without being accused of being biased. I am in charge of Renault and Nissan.

Would you consider buying Chrysler outright?
No. It's out of the question.

Can you envision any combination with Chrysler?
For any initiative, you're going to need to line up cash; not only cash for buying any assets but cash for working capital and investment. And today it would be fair to say all car manufacturers are preserving their cash, staying on the sidelines until the storm is past. We're still in an economy where credit and financing are hectic and unpredictable. I mean, some people tell you it's getting more normal, the spreads are going down, there's more money available. But frankly, we are very far from normal financing conditions. No matter how big the opportunity and no matter how cheap the assets, I don't think you're going to see anybody taking any initiatives.

What about a combination with Ford or GM?
Everything is lined up today to push toward consolidation of the industry, no doubt about it. But are you going to be able to get the money you need at a reasonable cost to pursue a strategy that would make a lot of sense in the midterm or long term? As long as you cannot answer this question, I don't think anyone is going to move.