Automaker alliance: Nissan could reduce Renault stake

For those familiar with the matter, it was clear on the second point that Renault and Nissan were talking about a fundamental restructuring of the unequal ownership structure of the 23-year-old alliance. As the savior of the former bankruptcy candidate, Renault currently holds 43 percent of the much larger and stronger partner today. Nissan, on the other hand, owns only 15 percent of Renault shares, which also have no voting rights.

Renault could reduce stake in Nissan

Nissan now wants to correct this in a kind of barter for an investment in Renault’s electric car division. The business newspaper “Nikkei” reported that Nissan had asked the French to reduce their stake in Nissan to 15 percent. “We recognize that Renault is considering the possibility positively,” she quoted a Nissan executive as saying.

According to the French business newspaper Les Echos, Renault is open to a deal. According to the Reuters news agency, Mitsubishi, which has been the third partner in the Franco-Japanese alliance since 2016, is also considering taking over shares in Renault’s electronics division.

Renault announced in May that it would split its activities: A division in France called “Ampere” could be dedicated exclusively to the development and construction of electric cars. The classic business with combustion and hybrid vehicles would be spun off, affecting locations in Spain, Portugal, Turkey, Romania and Latin America.

For this fossil unit, which bears the project name “Horse” (“horse”), Renault is looking for new partners. At the beginning of September it became known that the company was in talks with the Chinese carmaker Geely and the Saudi Arabian oil company Saudi Aramco about a stake. Renault wants to provide information on the progress of the group restructuring at an event for investors at the beginning of November.

>> Read also: Renault explores partnership with Geely and Aramco for combustion engine division

Renault is in a difficult financial situation and had to be saved from bankruptcy by the government in Paris with a loan of over five billion euros during the corona crisis. The ambitious austerity and reform program that de Meo has prescribed for the company is showing initial successes. But the write-off of the important Russian business because of the war in Ukraine recently threw the French back again.

According to “Les Echos”, Renault could earn up to four billion euros by selling Nissan shares, but in return would have to forego the annual dividends. In addition, there is a risk of a price collapse if Renault suddenly dumps its shares on the market. The companies would therefore consider setting up a trust company that could organize a gradual reduction in Renault’s stake.

Carlos Ghosn made Nissan the engine of the alliance

The reorganization would fulfill a long-cherished desire by Nissan. The Toyota rival had to swallow its pride in 1999 when management put Renault behind the wheel to save the then ailing group. The French took over 37 percent of Nissan and sent Carlos Ghosn and a management team to East Asia. Renault later increased its stake to 43.4 percent.

Within a very short time, Ghosn reorganized the company and expanded it into the financial and technological engine of the auto alliance, which, unlike its competitors, did not go through with a full merger. The problem: With the success, resistance to the unequal ownership structure germinated at Nissan.

The role played by the French state, which holds 15 percent of Renault and can effectively intervene in the economic affairs of the alliance, also caused irritation in Japan. As the double boss of Renault and Nissan, Ghosn was able to resolve the conflicts in his person for a long time. But when Paris pushed for a more extensive merger of the partners, there was a putsch in Japan.

In November 2018, Ghosn was arrested and later charged with alleged accounting violations and breach of trust upon his arrival in Tokyo. He escaped judgment by a spectacular escape to Lebanon. “But it was the drama surrounding Ghosn’s arrest that prevented further management integration,” says auto analyst Takaki Nakanishi.

A reorganization of the ownership structure has therefore been on the agenda since 2019. The talks were postponed for a long time because both Renault and the Japanese partners first had to get out of the loss zone – that’s done now.

An end for the alliance, on the other hand, is not up for debate: at the end of 2021, the partners presented a joint electric offensive with which they want to invest around 26 billion euros in models and batteries by 2030. However, it is still unclear how Nissan will deal with the spin-off of Renault’s combustion engine division.

Different strategies in combustion engines

This spin-off makes sense for the French, said Nissan boss Uchida recently. “If I look at Renault’s core European market, the electric car company would be in line with its reforms,” ​​he said in an interview with the financial newspaper Nikkei. But Uchida reported a need for discussion.

On the one hand, Nissan is mainly active in the US, Japan and China markets and is therefore faced with other issues. On the other hand, the Japanese noted that the new company would be based in France and the main business base in Europe. “We are discussing a variety of possibilities from the perspective of how they would lead to Nissan’s growth,” Uchida said.

Renault and Nissan also need to work together to keep up with their rivals. Toyota, with its allies Suzuki, Mazda and Subaru, has annual sales of over 16 million cars. VW and GM are still giants on their own. At the same time, the merger of Peugeot PSA with Fiat-Chrysler to form Stellantis created a European-American rival that also weighs heavily in sales.

More: Renault sales collapse by almost 30 percent after leaving Russia