C
arlos ghosnmay have allowed
himself some Schadenfreude this
week. On September 9th Hiroto Sai-
kawa fell on his sword after he, like Mr
Ghosn, faced accusations of financial
impropriety. Last November Mr Sai-
kawa, chief executive since Mr Ghosn
stepped down from that role in 2017,
had been instrumental in bringing
accusations of financial misconduct
against the Frenchman, who was voted
off the board in April.
Mr Ghosn has been under house
arrest since the spring, awaiting trial on
multiple charges, including under-
reporting his compensation by about
¥9bn ($84m) from 2010 to 2018. Nis-
san’s board this week put the cost of the
Ghosn affair at ¥35bn. The charge
against Mr Saikawa—that he improper-
ly pocketed ¥47m in performance-
linked bonuses—is peanuts by compar-
ison. He insists he was unaware he had
done anything wrong, echoing Mr
Ghosn’s protestations that he never did
anything that had not been approved by
Nissan. He blames the bonus scheme
on his ill-fated predecessor. It never-
theless adds to an image of misman-
agement that has almost halved Nis-
san’s share price in the past year.
In the early 2000s Mr Ghosn helped
return loss-making Nissan to profit-
ability. But recently the firm has strug-
gled in the hyper-competitive mass
market. In July it posted a 98.5% fall in
first-quarter profits and said it could
cut 12,500 jobs. Its partnership with
Renault, a French carmaker that owns
43% of its stock, is creaky. An uneasy
alliance between the two and Mitsub-
ishi of Japan was held together by the
Napoleonic Mr Ghosn’s charisma.
Many shareholders wanted Mr
Saikawa out for failing to heal the rift.
Industry-watchers think a full Franco-
Japanese merger makes sense in an
industry dominated by giants like
Toyota or Volkswagen, which churn out
10m cars a year and whose huge econo-
mies of scale leave more to invest in
pricey electric and driverless tech-
nology. But Nissan, which makes more
cars than Renault and resents the
French claim on its profits, has resisted
such a tie-up. With Mr Saikawa’s exit,
due on September 16th, it is all some-
body else’s problem. Nissan says that
around ten candidates are in the run-
ning to inherit the mess.Sayonara
NissanTOKYO
A carmaker loses another boss68 Business The EconomistSeptember 14th 2019
made from 1.5m cars. In an industry where
operating margins are often in low single
digits, Porsche’s exceed 18%, with average
profit per vehicle a turbocharged €16,250
($17,900) compared with €3,200 for Audi
and €960 for the mass-market vwbrand.
vw picked up the firm for a modest $8bn
a decade ago, after Porsche lost a bitter bat-
tle to take over the larger firm, a misadven-
ture that left it on the brink of bankruptcy.
This also left the Piëch and Porsche fam-
ilies, descendants of Ferdinand Porsche,
the progenitor of both firms, as the biggest
shareholders.
Porsche began to boom once it cannily
realised that its coveted horse-and-antlers
badge could adorn the bonnets of a range of
less obviously sporty models. It sold
55,000 sports cars in 2002, when it
launched the Cayenne, a bulky suv. It and a
smaller suv, the Macan, now make up 64%
of production. Ferdinand Dudenhöffer of
the Centre for Automotive Research, a
think-tank, reckons that electric cars could
help Porsche double sales in five years.
Now some smaller vw shareholders
think it is time to turn Porsche back into a
stand-alone business. They point to the
value unlocked by the spin-off of Ferrari
from Fiat Chrysler in 2015. Using the Italian
supercar company as a benchmark,
Porsche might be worth €150bn, according
to Evercore isi, an equity-research firm.
vw’s entire market value is currently
around half that. Frank Witter, vw’s chief
financial officer, last year called the notion
a “legitimate question”. Herbert Diess, vw’s
boss, has promised to assess which bits of
the group are really core to vw’s future. A
recent partial flotation of Traton, its lorry-
making arm, is a sign that he is prepared to
let some parts go.
Porsche may not be one of them. The re-
cent initial public offering of Aston Martin
stands as a warning that not all luxury
marques roar ahead. Its share price has
plunged by 70% or so since the listing last
October, as investors have come to suspectthat the historic British brand is no Ferrari.
Porsche’s handsome returns rely in part on
sharing the cost of developing new models
across the wider group. The Cayenne’s un-
derpinnings, for instance, are the same as
vw’s Touareg and Audi’s q7. Porsche and
Audi also plan to share a platform that will
underpin several new battery-powered
models. Philippe Houchois of Jefferies, a
bank, reckons that such economies of scale
are too important to jeopardise.
Another thing standing in the way of a
Porsche spin-off is vw’s governance struc-
ture. Through a stake that confers 20% of
voting rights, the state of Lower Saxony can
block strategic moves. So, too, can vw’s
powerful unions, thanks to representation
on the company’s supervisory board. Nei-
ther is likely to support breaking up vw,
which would reduce their influence over
Porsche’s profitable operation. And it is un-
clear if the Porsche and Piëch families want
to split up the vw juggernaut. Porsche’s ex-
traordinary performance is unlikely be re-
linquished by vw any time soon. 7They make them like they used toVW’s turbochargerSource: Company reports *Excluding China †Includes Mini and Rolls-Royce ‡Includes non-vehicle businessVehicle brands, 2018
Company Sales, m Revenues, €bn Operating profit, €bn
Volkswagen GroupOther4.2
1.5
1.6
0.3
0.012.8
2.5
0.2
0.0196.5
59.2
27.5
23.7
1.5106.7
85.8
15.7
3.44.0
4.7
1.6
4.1
-0.37.5
6.2
-0.3‡
0.8Volkswagen*
Audi
Skoda/SEAT
Porsche
BentleyMercedes-Benz
BMW†
Te s l a
Ferrari2