Photograph by Mark Peterson—Redux for Fortune

The only executive to head two Fortune Global 500 companies at once, Carlos Ghosn, the CEO of both Renault and Nissan, has created a $143 billion behemoth with far-flung headquarters, multiple boards, interlocking share ownership, and complex alliances. Will anyone else ever be able to run it?

By Brian Dumaine
December 29, 2014
December 29, 2014

Can a corporation literally become unmanageable? That’s a question that some are starting to raise about Renault-Nissan. Its CEO, Carlos Ghosn, who has done a brilliant job creating this auto giant, has consolidated his power by constructing what’s arguably the most complicated management structure anywhere outside the Vatican—one so convoluted that he may well be the only person in the world capable of running it. Who else oversees two Fortune Global 500 companies, never mind ones separated by a 12-hour flight and language barriers? He holds the chairman and CEO titles at both Nissan, with headquarters in Yokohama, Japan, and Renault in Boulogne-Billancourt, France. Says Michael Useem, a Wharton professor who has studied the companies: “For any other person, the two-CEO thing would be preposterous.”

Ghosn seems to be built for the job: He has the ability to connect with strangers instantly and to compartmentalize, no discernible private life outside his family, and a willingness to travel 300,000 miles a year (that’s 11 circumnavigations). The question is, Who will run this leviathan, which he calls the Renault-Nissan Alliance, after the 60-year-old retires, or if, God forbid, something happens to him? It is such a demanding, bone-crunching job that Ghosn himself has said that after he leaves no one person should replace him. In fact, on numerous occasions he has said to a close former colleague: “Who would want this job?”

For the time being, Ghosn wants it. Over the years he has built Renault-Nissan into the fourth-largest carmaker in the world, after Toyota, GM, and VW. Yes, the Alliance is doing reasonably well—Nissan’s sales were up about 12% in the U.S. in 2014 thanks to a garageful of new models rolling out. The stocks of both companies have done well over the past three years, with Nissan rising 50% and Renault more than doubling. But the CEO will have to do some fancy maneuvering if the company is to become one of the top three global automakers, a goal he set at Renault’s annual meeting last April. (Currently Renault-Nissan sells 8.5 million cars a year. Toyota, GM, and VW each move nearly 10 million a year.)

There are obstacles. Of late Ghosn (rhymes with “phone”) has witnessed an exodus of top executives from both automakers. A large part of his company’s growth strategy is to conquer the BRIC markets, but the economies in Brazil and China are starting to slow, and Russia appears headed for recession or worse. Then there’s Infiniti, which has been unable to gain traction in the luxury market and has missed its long-term sales targets—Ghosn a year ago even floated the idea that Nissan sell it. On top of all that, his $6 billion bet on the electric Nissan Leaf has yet to come even close to paying off.

Ghosn exudes confidence about his challenges. “We still have a long way to go,” he told a town hall meeting at Nissan’s Smyrna, Tenn., plant in November, “but I’m not worried because we know what to do—we just need to execute.” Will that be enough?

Carlos Ghosn CEO of Nissan

On a visit to the Smyrna plant, which produced more than 640,000 vehicles in 2014, Ghosn grilled employees about efficiency gains, quality control, and cost savings.Photograph by Mark Peterson—Redux

Well, we will find out the answer to that question because it looks like this Machiavelli of management isn’t going anywhere anytime soon. He’s been the head of Nissan for 15 years now and of Renault for eight. Six months ago Ghosn signed a four-year contract to remain chairman and CEO at Renault, and he has until March 2017 on his Nissan contract. Renault currently has a 43.4% (fully voting) stake in Nissan, and Nissan holds a 15% (nonvoting) stake in Renault, which effectively gives Renault control. No one on the board of either company seems to be pushing for a leadership change. Nissan’s board is mostly executives, and Renault’s board is largely controlled by the French government, which owns 15% of the automaker.

Ghosn’s real power, however, resides in a small, nondescript office building in Amsterdam, where he holds the title of Renault-Nissan Alliance chairman and CEO. It has its own board, composed of at least three Renault senior executives and at least three Nissan senior executives. The Amsterdam office is where most of the major strategic decisions are made. Dizzy yet?

It gets even more convoluted. Last summer the Alliance acquired the Russian automaker AvtoVaz, which makes that country’s top-selling Lada. Ghosn is now AvtoVaz’s chairman, so in effect he runs three auto companies, with three different official languages, responsible for 10% of all cars sold in the world and ringing in an expected $140 billion in 2014 sales. Take a deep breath: The Alliance also owns 3.1% of Daimler, and Daimler, which makes Mercedes, in turn owns 3.1% each of both Nissan and Renault. Daimler and the Alliance have been working on 12 major projects on three continents. The most recent: Renault is providing diesel engines for Mercedes, and the German carmaker is providing powertrains for Infiniti.

Anyone who would take on Ghosn’s job would have to be a glutton for punishment. Last January he explained to an audience at the Stanford Business School that his schedule was already filled for all of 2014. He has homes in France, Japan, and Brazil, and is divorced with four grown children. When asked, numerous executives who have worked for him over the years say they cannot think of anything he does outside of work besides following soccer. Executives who have worked for Ghosn talk about sacrificing their lives for their jobs.

On a visit to the Smyrna plant, which produced more than 640,000 vehicles in 2014, Ghosn grilled employees about efficiency gains, quality control, and cost savings. Renault-Nissan has 68 factories around the world.

Renault-Nissan has 68 factories around the world.Photograph by Mark Peterson—Redux

Ghosn still works 15 to 16 hours a day, circling the globe in his Gulfstream (which can fly from Paris to Tokyo nonstop), running town hall meetings, taking factory tours, dropping in on dealers, and attending executive and board meetings. He spends one-third of his time in France, a third in Japan, and a third bouncing around the 68 other countries where the Alliance has plants. It’s hard to imagine having the stamina to handle all that jet lag, the different cuisines, and an endless stream of decisions to make. Ghosn says he lives “like a monk,” keeping to a strict schedule of eating, sleeping, and exercise.

Ghosn is most famous for his turnaround of a struggling Nissan in 1999. This Brazilian-born Lebanese who speaks four languages—French, English, Arabic, and Portuguese (although not Japanese)—did what everyone said couldn’t be done in Japan: He broke up Nissan’s cozy keiretsu, abandoned the seniority system, and restored the carmaker to profitability within two years. He worked relentlessly and became a master of efficiency. The auto press nicknamed him “le cost cutter.” Such was his hard-driving fame that a Japanese publisher created a seven-part comic book about his corporate heroics. The manga has sold more than 300,000 copies.

Jose Muñoz, the chairman of Nissan North America, says that Ghosn makes decisions only at the appropriate place and time: “There’s no ‘Okay, you can do this’ conversation by the water cooler.” Like a general who has drawn up a detailed military campaign, Ghosn follows some strict basic rules. When he’s in Japan, he’s making decisions for Nissan. When he’s in Paris, he’s making decisions for Renault. And when he’s in Russia, he’s making decisions for AvtoVaz. That, he says, helps keep his life simpler and makes each team feel as if it has his undivided attention.

While Ghosn has been flying around the world, the auto industry has been abuzz with speculation about the growing number of departures from Nissan and Renault. In 2014, Andy Palmer, Nissan’s chief planning officer, left to run Aston Martin. Johan de Nysschen, who headed up Infiniti, left to run Cadillac. That followed a defection by Carlos Tavares, the COO of Renault, who in 2013 told Bloomberg (before telling Ghosn) that he wanted to run his own company. He now runs PSA Peugeot Citroen. Tavares’s predecessor Patrick Pelata left, taking responsibility for an industrial espionage scandal at Renault that turned out to be a hoax. He now works at Salesforce.com.

The partings seemed amicable, for the most part. Ghosn can be a tough boss, but even his critics admit he’s fair. He’s not abusive and never takes down an employee in public. Sources close to the departed executives give various reasons for their leaving, from being tired of the grind to having lived overseas too long to being offered a great opportunity at another company. Even so, it’s hard to imagine that Ghosn’s entrenched position doesn’t have something to do with it. “Every time someone starts understanding how the Alliance works,” says a former executive, “something happens, and they leave.”

On a visit to the Smyrna plant, which produced more than 640,000 vehicles in 2014, Ghosn grilled employees about efficiency gains, quality control, and cost savings. Renault-Nissan has 68 factories around the world.

.Photograph by Mark Peterson—Redux for Fortune

“It’s interesting,” says Ghosn, “that everyone’s talking about executives leaving Nissan and Renault, although I don’t think the turnover is higher than what I see at GM, Ford, and VW.” As an example, he points out that Infiniti recently lured Roland Krüger from BMW to replace de Nysschen. Krüger will have his work cut out for him at the underdog luxury brand, but he seems to have the energy for the job. Recently he became the first German to trek solo to the South Pole.

Whether or not that level of turnover is normal, the fact remains that neither Nissan nor Renault has a clear candidate to replace Ghosn. Most of today’s top-line executives are in their fifties and sixties, and with Ghosn having at least four more years at the helm, the next leader is likely to be someone younger, says one former employee. The CEO says that each board has an envelope with the names of two or three candidates, though there are no obvious front-runners, at least to the outside world. “I’m not planning to go anywhere soon,” says Ghosn. “But this image of someone hanging onto his chair and eliminating all this potential is just a joke.”

The succession question is no joke for shareholders. “Ghosn will have to tell the world who’s going to take over,” says Ian Fletcher, a principal analyst at IHS Automotive in London. “He has to make his heir clear to shareholders and to the industry. If he doesn’t, he’s going to raise worries.”

If Renault-Nissan cannot find another globetrotting polymath like Carlos Ghosn, the remaining options leave much to be desired. In one scenario Renault-Nissan would be run by two CEOs, but we know how well dual-leadership models have worked out. (Citigroup or SAP, anyone?) Nissan and Renault could split up, but it’s hard to imagine two small companies surviving in an industry where scale counts. The third and likeliest scenario, say analysts, is that Nissan and Renault merge and have a single CEO. Even that wouldn’t be easy. One former employee who worked on a task force to analyze a merger of the two carmakers said that the cultures are so different, and the interlocking share structures of the Alliance so complex, that it would probably keep top management distracted from the core business for a year or two while they sorted out a corporate marriage.

Photos, Pelata: Patrick Kovarik— AFP/Getty Images; Tavares: Thibault Camus—AP

Many in the industry consider Nissan a good but not a great car company, and Ghosn would like to see it move from good to great. How is he going to do that? Ghosn says his strategy is “mobility for all.” Asked what he means, he replies, “You have to be present in every market in the world and in every segment in every market.” If that sounds fanciful, the Alliance at least is making progress. It produces 110 different models in 170 different markets. Taking advantage of a sophisticated and flexible platform-sharing system, the company has a host of new models lined up, including new Nissan Maxima sedans and Murano SUVs. Renault debuted its new Espace minivan at the Paris auto show in October. This will be followed with replacements for the Megane compact car, Scenic compact minivan, and Laguna midsize sedan.

Some industry consultants wonder how the Alliance will pull off its “mobility for all” strategy, especially since the company has a reputation for being somewhat volatile—the opposite of a Toyota that just marches forward. The Alliance, for example, does a lot of things right—the new Nissan Rogue crossover is hot, on track to see a respectable 200,000 units this year. Renault’s low-cost Dacia brand is booming in Europe. But when Nissan revived the Datsun nameplate in India to compete with the $3,700 Tata Nano, the international car safety organization NCAP awarded the car zero stars for safety and recommended its withdrawal. The NCAP said the body shell is so weak that even if the company were to install airbags, it wouldn’t improve the survival chances of the occupants. A Nissan spokesperson says, “The Datson Go meets all local safety regulations, and we will continue to sell it in India.”

To make it to the ranks of the top three automakers, Ghosn is depending upon do-or-die stretch goals. He’s pushing Nissan to achieve what he calls his Power 88 Plan, meaning the company aims to achieve 8% global market share and 8% operating margins by the end of fiscal year 2017, which ends in March. Ghosn knows it will be hard to achieve his goal. The company is currently at what you might call Power 66—6% market share and margins—which means it has less than three years to increase its market share and profits by 33%. It is one thing to set aggressive stretch goals; it is quite another to make sure they’re achievable. Wharton’s Useem says that a CEO has to make sure that even the most extreme stretch goals are achievable. “If not, good executives can become frustrated and leave.”

There’s no question that the Alliance, on one level at least, has helped achieve efficiencies of scale and offers the best hope of Ghosn’s meeting his operating margin goals. That’s because the cross-shareholding structure gives Renault and Nissan an interest in seeing each other do well. In an age when most auto alliances have failed—Chrysler/Daimler and GM/Fiat come to mind—Ghosn has succeeded because he has given both Nissan and Renault the autonomy to act within certain bounds. Ghosn once compared the Renault–Nissan partnership to a marriage: “A couple does not assume a converged, single identity when they get married. Instead, they retain their own individuality and join to build a life together.” Says one former Nissan executive: “There’s none of the usual ‘I’m a winner and you’re a loser’ syndrome you see in traditional mergers.”

Ghosn uses logic and sometimes a little coercion to persuade the managements of Renault and Nissan to share designs and parts. If it’s mutually beneficial, it happens. (The downside is that if a collaboration envisions a winner and a loser, it probably won’t happen, even if there would be a net gain for the Alliance.) During the past year the Alliance has pushed to achieve even more efficiencies: Functions such as HR, supply chain, R&D, and purchasing are now being run out of Amsterdam. The company claims that such synergies helped the Alliance shave $3.6 billion in costs in 2013.

While he’s shaving costs, Ghosn must also figure out how to stay a leader in self-driving cars (see related story), rejuvenate Infiniti, and make electric cars go mainstream. No one has been as gung ho about electric vehicles (EVs) as Ghosn. In 2010 he launched the Leaf, a five-passenger electric sedan that got rave reviews from the car press. It was not the first electric car on the market, but it was the most ambitious. Nissan has invested $6 billion in the project. Around the time he launched the Leaf, Ghosn boasted that Nissan and its sister company Renault, which offered a similar EV under the Zoe nameplate, would sell 500,000 of the vehicles by 2013.

It hasn’t quite worked out that way. By many measures, the Leaf is a success. It is the world’s bestselling EV. This year American consumers will snap up about 30,000 of the cars, making it the bestselling plug-in vehicle in the U.S., ahead of the Tesla S and the Chevy Volt. The car, which has a range of 86 miles and a sticker price of $29,010 (before a $7,500 federal tax credit) has proved popular with drivers who have short, regular commutes.

Even so, the Leaf has fallen far short of Ghosn’s target, having sold only 152,000 units since its launch—a far cry from the 500,000 he predicted for 2013. To put Ghosn’s goal into perspective, so far global sales of all plug-in vehicles worldwide, according to the Plug-In Hybrid & Electric Vehicle Research Center at UC–Davis, amount to just more than 500,000 units.

What went wrong? The age-old problem with EVs: range anxiety. Ghosn argues that the problem is a lack of charging stations. The country has only about 10,000 installed, compared with more than 115,000 gas stations. That ratio doesn’t sound too bad, especially for a new technology, until you remember that it takes three to four hours to charge an EV compared with about five minutes to fill up a traditional car.

Ghosn says that sometime in the not-so-distant future, electric cars will have a 300-mile range. Also, he believes that super-fast chargers, which will be able to fill an electric car in about 12 minutes, will become widely available soon. “We already have prototypes that can do that,” says Ghosn.

Datsun: Simas Ardian—Bloomberg via Getty Images

As for Nissan’s luxury division, Infiniti, the brand has been growing, but not at a pace that satisfies Ghosn. A few years ago Ghosn said that Infiniti would be selling 500,000 cars a year by 2017. This year it will sell only 120,000. That goal was recently moved back to 2020. The division is profitable but seems stuck in the second tier of luxury brands. Its cars simply can’t compete with high-end luxury makers such as Mercedes, BMW, and Audi. Muñoz, who is currently in charge of Infiniti, says, “Typically, Infiniti buyers aren’t cross-shopping BMWs or Mercedes, but are Chevy and Ford owners looking to trade up.” Infiniti, needing a reason besides horsepower and a lower price to lure well-heeled customers behind the wheel, has been stressing the self-driving capabilities of its cars. That can’t hurt, but the brand will need more than that. Bringing Krüger from BMW to run the division will help instill some of that Bavarian motoring DNA. The marque has also hired a new advertising agency to stress that Infinitis are about excitement. We’ll see. Perhaps the most hopeful sign is that Ghosn, in 2013, shifted Infiniti’s headquarters from Japan to Hong Kong to move its employees out of the shadow of Nissan and its bureaucracy.

Ghosn is betting that electric cars, autonomous vehicles, and a sharp eye on costs will help drive the Renault-Nissan Alliance toward a bright future. Given his impressive track record and his willingness to experiment with new technology, he may well succeed in bringing the Alliance into the ranks of the world’s top three automakers. Yet even if he does, there still remains the question of who, if anyone, can run this Rube Goldberg organization when he steps down. If Ghosn in the next few years can’t figure out how to make the Alliance more manageable, or clone himself, in all likelihood it will have to undergo a long, costly restructuring. That’s not the kind of legacy any CEO would want to leave behind.

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