Carlos Ghosn

President, Nissan Motor Co.

It was the moment everyone was waiting for. Carlos Ghosn, the gaijin president of Japan's Nissan Motor Co. (NSANY ), bumped into Toyota Motor Corp.'s (TM ) president, Fujio Cho, at a reception in May hosted by the Japan Automobile Manufacturers' Assn. The two titans exchanged greetings and then, in a tip of the hat to Ghosn's achievements, Cho said: "Nissan's profit results are impressive. We'd like to grow that fast." Of course, Toyota is no slouch when it comes to profits, but the comment underscored a fact now recognized in the industry: Former Renault executive Ghosn, 48, has made it in Japan--big time.

Indeed, far from pitying the once near-bankrupt Nissan, Toyota now sees the company as a threat. Nissan's sales in Japan surged 6.6% in May, for example, while Toyota's fell 3.6%. Although Toyota's operating profits of $9 billion exceeded Nissan's in absolute terms, Nissan's margins were 7.9%, vs. Toyota's 7.4%. Nissan posted record operating profits of nearly $4 billion last year, and is now giving a much-needed earnings boost to France's Renault, which owns a controlling 44.4% stake in the Japanese carmaker.

A day after Nissan unveiled its newly restyled Elgrand luxury minivan on May 21, Toyota took the wraps off a lookalike model called the Alphard. It's all vindication for Renault's decision in 1999 to dispatch Ghosn, a worldly exec born in Brazil to Lebanese parents and educated in France, to resuscitate Japan's No. 2 auto maker.

Known as le cost killer from his days as chief operating officer at Renault, Ghosn engineered the turnaround at Nissan with a scrap-and-build philosophy. The first objective: trim the fat at Nissan by eliminating 21,000 jobs, closing five factories, and demanding 20% savings from suppliers. Then came a makeover of the product line and the debut of such hits as the new March subcompact--Japan's third best-selling model in May--and the Altima sedan, winner of the 2002 North American Car of the Year Award. In the Japanese best-seller Renaissance, an autobiography he penned last year, Ghosn calls cost cuts the "gift" that's making Nissan's revival a reality.

Ghosn, 48, is already looking forward to a future challenge: picking a worthy heir apparent. That's because he is scheduled to leave Nissan in 2005 to take on the post of super-CEO overseeing both Nissan and Renault. Ghosn is keeping mum on who's being groomed to fill his big shoes in Tokyo.

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