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Nissan's Ghosn sees no advantage in merger with Renault

Monday, 20-Oct-2003 11:20PM PDT
Story from AFP / Yasuhiko Seki
Copyright 2003 by Agence France-Presse (via ClariNet)

TOKYO, Oct 21 (AFP) - The president and chief executive of Nissan Motor, Carlos Ghosn, repeated Tuesday that he saw no benefit for Japan's second-ranked carmaker in a merger with its French parent, Renault SA.

He stressed that having separate identities would create better value.

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"There is no way we are going to merge these two companies ... A merger ... will destroy value. I see no advantage in a merger," Ghosn said at the Tokyo International Automotive Conference in Tokyo.

"If you do not respect people's identity, people will not be motivated. And if they are not motivated, you will not get performance," he said, explaining the need to maintain separate corporate names and brands.

Ghosn also stressed that the alliance between Nissan and Renault is working more smoothly than those of competitors, saying procurement costs had been slashed by 30 percent since 1999 and there were virtually "no overlaps" geographically and operationally.

As a consequence, "Nissan will continue to be based in Japan and Renault in France," he said.

Renault stepped in to take control of Nissan and rescue it from the brink of collapse in 1999 and now holds a 44.4-percent stake in the Japanese carmaker, which has the highest operating profit margin of any carmaker worldwide.

Nissan in turn has a 15-percent holding in the French auto giant.

Ghosn said he was "confident (Nissan) will not fall back" but at the same time warned of the risks of complacency "if you don't pay attention to the fact that the company has to stretch itself to the maximum."

Ghosn also expressed confidence that Nissan would achieve its goal of increasing its annual global auto sales by one million vehicles from 2002 levels by September 2005 -- one of key targets set under the three-year Nissan 180 business plan -- despite a challenging environment.

"It is tough but I am confident of achieving it," Ghosn said, stressing that he would not sacrifice profitability just to achieve the sales target.

The Nissan boss said that after assuming the presidency of Renault in 2005, he may initially focus more on steering the French firm toward sustained growth but stressed he will stay on in the top position at Nissan.

"I left Renault back in 1999. It is now a different company ... It is fair to say that I will be spending considerable time in Renault (initially)," he said but added: "After the initial period, I will be spending approximately 50 percent of my time in Nissan and 50 percent in Renault."

In April last year, Renault chairman Louis Schweitzer said he would separate the functions of chairman and president, with Ghosn assuming the latter post from the spring of 2005.

Turning to prospects for the Chinese car market, Ghosn said he saw no immediate end to rapid growth there or the emergence of any over-capacity, despite the fact that more non-Chinese automakers are rushing to build factories to take advantage of the burgeoning market.

There was no reason to believe that the high growth rate in China would stop, Ghosn said, although the problem of over-capacity may eventually emerge once the Chinese car market matures.

"Is it going to be imminent? I don't think so," he said.

In June, Nissan and China's Donfeng Motor Corporation launched a two billion dollar joint venture, Donfeng Motor Co. Ltd., to manufacture commerical and private vehicles for China's booming market.

The company is targetting 550,000 unit sales by 2006, of which 220,000 will be passenger cars.

The conference was being held on the eve of the Tokyo Motor Show which opens to the press on Wednesday and to the public on Saturday.