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.