TOKYO (Reuters) - Nissan Motor Co 7201.T said Carlos Ghosn will step aside as CEO after leading the company for 16 years, allowing him to concentrate on deploying his cost-cutting expertise across its alliance with Renault SA RENA.PA and newly added Mitsubishi Motors Corp 7211.T.

In handing over the helm to Hiroto Saikawa, a company veteran of 40 years, Ghosn ends years of speculation over when he would relinquish the top job at Japan’s No. 2 automaker amid investor concerns that he was stretching himself too thin.

Bringing Mitsubishi into the alliance last year has put the group's annual combined sales at 9.3 million vehicles - close in size to industry leaders Toyota Motor Corp 7203.T and Volkswagen AG VOWG_p.DE.

That has brought new opportunities to benefit from scale but also the challenge of balancing the interests of all three automakers - particularly at a time when progress in plans to integrate Nissan and Renault further has been slow.

Ghosn, 62, will continue to be chairman at Nissan, a position he also holds at Renault and Mitsubishi. But he will remain CEO at Renault and heavily involved in the company, an indication of the depth of problems he still sees at the French automaker.

“There are still lots of things to be done inside the company in order to make its growth sustainable and lasting and solid,” he told Reuters in an interview.

While he did not elaborate on the issues he planned to tackle, deeper capital ties with Nissan have been stymied by the French government’s lifting of its stake in Renault to around 20 percent with little warning to Ghosn or the board.

Tightening emissions regulations have also exposed strains in the Nissan-Renault alliance as plans to integrate their engines and gearboxes have moved much slower than management had hoped for.

COST-CUTTING SUCCESSOR

Known as ‘Le Cost Killer’ from his earlier careers at Renault and Michelin, Ghosn burnished his reputation by engineering Nissan’s comeback from years of losses and debt. Unafraid to trample over long-standing business customs, he became a hero in Japan and one of the auto industry’s best known executives.

He leaves in his place at Nissan a man cut from very similar cloth with Saikawa a veteran cost-cutter who has spent much of his career managing purchasing and supply chains.

The 63-year old was named the company’s chief competitive officer in 2013, became co-CEO last November and also currently heads Japan’s auto industry lobby.

“The timing is a bit surprising,” said Takeshi Miyao, Asia managing director at consultancy Carnorama. “It appears Ghosn has decided very quickly that Saikawa is the right person to lead the company.”

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Nissan is the strongest of the automakers in the alliance, long outperforming Renault in terms of vehicle sales and profits, while Mitsubishi still needs an overhaul after a mileage cheating scandal last year.

“Ghosn is likely to focus on strengthening and raising profitability at all the alliance members so that they are not overly dependent on Nissan,” said Miyao.

“Even if the alliance as a whole produces 10 million cars, if 3 million of those cars are not profitable it will be difficult for the alliance to continue.”

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The three automakers will be looking not only to leverage scale to cut costs but also to strengthen their competitiveness in electric and self-driving cars, Ghosn said.

Brazilian-born, of Lebanese descent and a French citizen, Ghosn began his career at Michelin in France, moving on to Renault, where he oversaw a turnaround of the automaker.

He joined Nissan in 1999 after Renault bought a controlling stake and became its CEO in 2001.