Renault's board of directors announced that the number two at the company, chief operating officer Thierry Bollore, would temporarily fill in for Ghosn.

"Mr Ghosn, temporarily incapacitated, remains chairman and chief executive officer," a statement from Renault's board said.

While Ghosn deals with his legal issues in Japan, Mr Bollore will have the same authority to run the company as the CEO, it added.

Renault's board said its decision was made with an eye towards keeping the company on a steady course "to preserve the interests of the group and the continuity of its operations".

Ghosn runs Renault, Nissan and the Renault-Nissan-Mitsubishi alliance that he helped turn into the world's biggest car-seller last year, and France and Japan want to keep it intact.

Renault's move to appoint a temporary leader was in line with a demand by the French government, which owns a 15 per cent stake in the firm.

Finance minister Bruno Le Maire had said earlier that Ghosn was not in position to lead the Renault Group while fighting the accusations in Japan.

The French car maker said after an emergency meeting of its board of directors in Paris that it would further consolidate its alliance with Nissan. The two firms have a partnership with smaller car maker Mitsubishi.

There was no update on Wednesday in Tokyo from prosecutors on Ghosn's case, and no public word from Ghosn himself.

It was unclear where he was being held following his arrest on Monday.

Nissan's board of directors is due to meet on Thursday and expected to approve a proposal to dismiss Ghosn as its chairman and another executive, representative director Greg Kelly, who is alleged to have collaborated with his boss in falsifying financial reports.

Australian Associated Press