A Rock Star Is Reborn

It's seven minutes to showtime and Carlos Ghosn is backstage and ready to roll. A translucent angel-hair microphone descends along his right cheek from beneath his carefully coiffed hair. His makeup is perfect, having been applied moments before by his personal makeup artist. ("Do you like strawberry?" she asks, as she applies lip gloss.) He's outfitted in a slimly tailored chocolate pin-striped suit designed especially for him by Louis Vuitton. Standing in the wings, he peers out at the audience. "That's a good crowd," he says, "but it's nothing like Tokyo. That crowd was spectacular." Suddenly, the music swells and the lights come up. He takes a pull from his water bottle, kicks the floor like a bull getting ready to charge and strides onstage to unveil a new fat-backed sports car at the LA Auto Show. Just before he goes on, the CEO of Nissan and Renault confides: "This is the fun part."

Until lately, though, it hasn't been that much fun for the man once hailed as the auto industry's rock-star CEO. Back when he rescued a nearly bankrupt Nissan in 2000, Ghosn was so revered he became the subject of a superhero comic book in Japan. Bill Ford tried to hire him to fix his family firm, and last year General Motors' largest shareholder sought to engineer a marriage with Ghosn's Franco-Japanese auto alliance to create a global car colossus with vast economies of scale. But after GM chairman Rick Wagoner decided he'd rather go it alone and rebuffed Ghosn, things took a turn for the worse. With few new models in the showroom, Nissan's sales slid and Ghosn (rhymes with phone) missed his profit goals for the first time.

Suddenly, the auto industry's renaissance man—born in Brazil, reared in Lebanon, schooled in Paris—appeared human. So earlier this year he hunkered down, stopped going to auto shows and declared a "performance crisis" at his company. He lit a fire under his designers to accelerate development of new models that are good on gas and easy on the eye. And he unsheathed the cost-cutting knife that made him famous as "Le Cost Killer," slashing 1,500 jobs. Still, with Nissan's stock free-falling, analysts who once were Ghosn groupies turned on him, concluding that one man simply could not run two car companies 9,700km apart. "The glory days," one wrote, "are long gone."

Now, though, the rock star is attempting a comeback. With new hit models like the gas-sipping Versa subcompact and Rouge small sports wagon, Nissan's U.S. sales (which generate 60 percent of its profits) are climbing again, up 6.1 percent last month, while the overall auto market fell 1.6 percent. And profits are back in Ghosn's golden range, with operating earnings hitting $3.1 billion in the three months ending in September, up 5.3 percent. Ever confident, Ghosn now claims that Nissan never really blew a tire. His crisis call to arms, he says, was just a bit of executive theater to rally the troops. "People are talking about the turnaround and it's a joke," he says. "The turnaround took place in 1999–2000."

That's when Ghosn came to personify Nissan-Renault, a rare happy automotive marriage. This year Daimler dumped Chrysler and Ford is now splitting with Jaguar. But Nissan-Renault hangs together because neither owns the other outright. Rather, they share stock in each other and jointly develop cars and factories. The arrangement, which gives each autonomy while saving billions by sharing costs, generates some of the industry's biggest profits. Still, Detroit dismisses the idea of joining Ghosn. "Absolutely not," says Ford CEO Allan Mulally. "Any kind of link-up would be a distraction."

Ghosn is still intent on adding an American automaker to complete his global alliance. "Carlos is remarkable; he reminds me of Andy Grove, one of the founders of Intel," says ex-GM director Jerry York, who tried in vain to play matchmaker between Ghosn and GM. "He truly believes you always have to run scared." Ghosn is convinced the cost of engineering high-tech green cars will eventually push a Detroit automaker into his arms. "At some point," he says, "one of them will come to the conclusion that it's better to be with somebody than to be alone."

Ghosn is back out on the road, rehabbing his—and his company's—image. NEWSWEEK went along for the ride, spending three days riding shotgun with him last month. In a meeting with analysts at the LA Auto Show, Ghosn stresses Nissan's recent success with small cars and hints he may kill the slow-selling Titan truck. "The name of the game is going to be more fuel-efficient cars," he says. "And when you make your product plans for the future, you can't say, 'I've always had a pickup truck, so I'll just keep improving it.' If you can't make it profitably, you have to get out." Afterward, analyst Steve Usher of Japaninvest switches his neutral rating on Nissan to a buy. "He's back," says Usher. "But it's not the return of the conquering hero. He's got to deliver again."

There's still plenty of work to be done. Like Detroit, Ghosn is playing catch-up to Toyota in the green-car race. Even though he just launched a hybrid version of the Nissan Altima, Ghosn remains a skeptic of the high cost of gasoline-electric cars, which earn little or no profit. Ghosn's big bet is on a small electric car he promises to put on the road by 2011. "I'm convinced that for urban driving the answer will be the electric vehicle," he says. "With oil at $100 a barrel, there's a lot of interest in a zero-emission car." Unlike hybrids with their complicated dual motors, electric cars have greater profit potential because they run on a single propulsion system. Nissan is working with Japanese electronics maker NEC to develop a lithium ion battery that would allow a car to go 120km on a charge and juice up in an hour.

But that's not what you'll find in Ghosn's garage. These days, he's driving Nissan's new GT-R, the hot rod he introduced to wild adulation at the Los Angeles and Tokyo auto shows. The 480hp, $69,850 sports car goes from zero to 100kph in under four seconds—and guzzles plenty of gas along the way. Ghosn argues Nissan needs this "halo car" to attract buyers and boost its image. Still, he adds, getting back on message: "I am totally conscious of the fact that we have to bring cars that are much more environmentally friendly."

It's not an easy balancing act. And in a private moment, Ghosn admits the past year took a toll. "When your performance declines," he says, "the first thing you do is question yourself." Rather than retreat, Ghosn says he was emboldened to take risks. For example, he just formed an unusual alliance with a Bajaj, a motorcycle maker in India, to try to engineer a ultra-cheap $3,000 car for developing countries. Now that Nissan is rolling again, his rock-star swagger is returning. "Nissan is the biggest turnaround in the history of the car industry," he says of the company's 2000 revival. "Nothing and nobody is going to take it away from me."

The next day, Ghosn is back where he is happiest—onstage before an adoring audience. This time it's at Stanford University, and he's charming a packed auditorium of business students. He brings down the house when he explains his inability to woo reluctant GM. "Can you buy your wife?" he asks to howls of laughter. "You can't say, 'You have to live with me because I bought you.' Each person wants to feel enriched by their marriage." In the end, Ghosn gets a hero's ovation, but M.B.A. student Lydia Jett wonders about his staying power. "You can build yourself up to be a great man," she says. "But to be a star like Jack Welch, he has to deliver over the long term." That's why Ghosn is on the road again, trying to prove he's more than a one-hit wonder.