Carlos Ghosn’s Arrest Really Impacts Nissan’s Fate!

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Former Nissan Chairman Carlos Ghosn (L) and his wife Carole (2nd L)

The fate of the alliance between the three giant carmakers Renault, Nissan and Mitsubishi are under the spotlight after the arrest of Carlos Ghosn, the chairman of Nissan.

Carlos Ghosn is the man behind the miracle of bringing French and Japenese companies together to be the world’s second-largest car manufacturing group and dominated the partnership.

But now after Carlos Ghosn is in jail for the charges of illegally underreporting his income, Renault face a leadership crisis. With the fall of Ghosn, the truth has surfaced, as he exercised a significant level of powers and all the success of alliance revolved around him only.

The trouble operation deepens with him, not leaving behind a clear successor.

Nissan woes deepened after Nissan issued a profit warning recently, which made it clear that the company is facing the real problem after Carlos Ghosn’s arrest.

The firm downgraded its projection for net profit in the fiscal year to March 2019 from 410 billion yen ($3.7 billion) to 319 billion yen, the second cut in its forecast in recent months which is a red alert for the company.

The company’s corporate governance is under question after the incident. Renault is trying to recover from the losses and has come up with some of the significant problems it faces.

Additional expenses arising from the implementation of a warranty extension campaign covering certain vehicles sold in the US market is causing a problem for the company. Chief Financial Officer Hiroshi Karube said the “executive misconduct in Japan” had had an impact on “potential new clients”.

The American market is a significant concern for the company as it is not growing and recovering as the company expected. According to the company’s official, the company is overstretched and the impact of which is significant. In February, Nissan already slashed its full-year forecast, as it revealed that nine-month net profit had dropped 45% a decline the firm blamed on rising raw material costs and foreign exchange difficulties.

Alan Brett, who is head of governance ratings at MSCI, a financial data firm that had given Nissan it’s lowest possible rating because of weak management oversight. Nissan is trying to rectify all its problem to rebuild its tarnished image.