When the high and mighty had a great fall like Humpty Dumpty

It will be quite a while before Carlos Ghosn gets out of jail unless a miracle happens.

Reading the recent news about the once powerful Chairman and CEO of Renault-Nissan handcuffed in court to plead his innocence was a little sad. Reports said he had clearly lost a lot of weight and the grey hair were more visible. Jails are not the easiest of places to survive in especially when one has to battle isolation and weariness.

It is nearly two months since Ghosn was whisked away from the Tokyo airport to an unknown destination for his imprisonment. It is now learnt that he had planned to meet his daughter for dinner the same evening and, bit by bit, the details are coming out from her siblings.

It is only natural for the Ghosn family to feel distraught by the turn of events. After all, this was the same man who had rescued Nissan two decades earlier. Today, in their eyes, the prey has possibly turned predator but then the guilty need to pay the price. Period.

The same goes for Rupert Stadler, the charismatic CEO of Audi, who was arrested last year in connection with the Volkswagen diesel scam that had stunned the world in 2015. Like Ghosn, Stadler was no lightweight and was the face of his company till the Humpty Dumpty fall happened and he went into oblivion.

High-profile exits

Come to think of it, the automotive industry has seen the exit of some really big names over the last three years. Martin Winterkorn, the all-powerful chief of VW, had no choice but to quit after the emissions scandal. Here was someone who was truly larger than life and had big plans for his company to emerge the top player in the global arena.

The script was going perfectly to plan till the fudging scam broke out and brand VW was in tatters. As the boss, Winterkorn had to bow out and it was quite a dramatic exit for a man who headed one of the world’s largest automobile groups.

In the case of Mark Fields, there was no scandal or drama accompanying his exit as CEO of Ford Motor Company except that nobody expected it to happen. He was the natural successor to his affable and hugely competent predecessor, Alan Mulally, who had done a remarkable job in fixing Ford.

Fields had been with the company for many years and the stage was set for him to take over and steer it to the next growth phase. However, things did not quite go according to plan and he left in less than three years after taking over as CEO.

As in the case of VW, companies like Mitsubishi also found themselves in the eye of a storm for fudging mileage figures. Their leadership team had to apologise for this act and this was the time Mitsubishi was in dire need of a lifeline to keep it afloat.

It was the same Ghosn, now cooling his heels in jail, who steered Nissan to acquiring a controlling stake in its fellow Japanese auto-maker and roping it into the alliance fold. Going forward, he had big plans for the Renault-Nissan-Mitsubishi alliance to play an important role in the global arena.

Ironically enough, Nissan’s top management had to apologise too at the 2017 Tokyo Motor Show for inspection irregularities at its plants. Japan has been through its share of controversial issues like Takata Corp’s faulty airbags or Kobe Steel’s quality data fraud, which hit world headlines.

How do companies recover from such setbacks when their top bosses face the music? Does the show still go on uninterrupted or are some individuals bigger than the institutions they were part of?

Stadler and VW’s scam

When the VW scam broke out, it really looked as if the once indomitable German brand was on its way to ignominy. After all, this was a case of blatant cheating, which meant that the punishment to the guilty would be severe.

And, sure, people were jailed and hefty fines imposed even while VW attempted to set its house in order again. Perhaps one of the good things that its leadership team did was to be upfront in apologising for this act. For instance, during media interactions with this writer, company representatives made no attempt to be either defensive or aggressive about this issue. They admitted it was a huge mistake and something that would never be repeated.

Yes, the consequences were quite serious as the German auto industry lost a fair deal of credibility in the process. When the chips are down, it is only natural for rivals to move in for the kill. VW was constantly in the news but, simultaneously, worked on rebooting its operations. In an odd way, the scam actually helped the company get more nimble on its feet and pave the way for an open culture within its workforce. Things are more informal now even while there is a hierarchy and structure in place. VW is now aiming for the sky in electric mobility and has clearly put the past behind while gunning for the future.

Stadler’s imprisonment was a setback for sure but the show goes on at Audi, which continues to be a top draw in the luxury brand space. Its growth plans for China are intact and as a key constituent of the VW group, Audi is ready to meet the challenges of the future.

Ghosn’s fall

In the case of Ghosn, things are perhaps a little different. He was the face of Renault-Nissan (and, more recently, Mitsubishi) and pulled out all the stops to make the alliance even stronger. He led from the front in initiatives like electric mobility and making an aggressive entry into emerging markets like India.

Unlike Stadler, Ghosn was a regular face in the media and his interviews always made for racy and meaty copy. He was aware of his charisma and the fact that he stood tall among his peers in the automotive industry. Today, there is still a void within Renault-Nissan after his arrest even while cars continue to be made across the plants globally.

It was Ghosn who sewed up the alliance and reports suggest that it was the next step of a possible merger with Renault that raised the hackles within the Nissan fabric. After all, the once beleaguered Japanese car-maker was now the more powerful of the two but still had to play second fiddle to its French counterpart that still enjoyed more rights.

A merger was the last straw and Ghosn paid the price. Nobody is suggesting that he was not culpable but there are still unanswered questions on his jail tenure, which seems indefinite at this point in time. It will be interesting to see how relations between Renault and Nissan (along with Mitsubishi) continue till then.

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