By on June 16, 2011

Rumors of Renault and Nissan taking over Russia’s AvtoVaz have been around for a while. We have a new one! The Nikkei [sub] picked up indications that Nissan and Renault will take a majority in AvtoVaz, Russia’s largest automaker.  Except that The Nikkei doesn’t report it as a rumor. The headline “Nissan-Renault To Take Control Of Russia’s AvtoVaz” sounds quite definite. Sadly, it is not true.

In 2009, Renault had taken an interest in the Russian carmaker. The interest  grew to slightly more than 25 percent. That didn’t take much money, but lots of guts, because AutoVaz was as good as dead at the time. Now, Russia’s car market is booming again. The Nikkei expects Nissan to pay around $1 billion for another 25 percent of AvtoVaz’s shares, bought from AvtoVaz shareholders Russian Technologies Corp., investment bank Troika Dialog and others. Combined, the Nissan-Renault alliance will own a controlling stake in AvtoVaz when the deal closes.

The Nikkei already hails the deal as creating “the world’s third-biggest automobile group, as their combined sales in 2010 came to 7.23 million units, beating Volkswagen AG.” The math may be right, but the logic is lacking.

  • First, 2010 is over. One doesn’t get last year’s credit for this year’s M&A.
  • Second, Carlos Ghosn and his spokespeople are always quick to stress that there is a Renault-Nissan Alliance, but that there is no Renault-Nissan company. Both are joined via cross shareholdings, and both have the same boss, Carlos Ghosn. But otherwise, they are separate. Technically, AvtoVaz will be owned by two car companies, Renault and Nissan.
  • Third, Nissan and Renault always reported their sales separately. On the 2009 OICA list (the new one is not out yet), Nissan ranks #8 and Renault ranks #11. On the TTAC Top Ten of 2010, Renault ranks 10th and Nissan ranks 6th. Which came close, but wasn’t enough to unseat Volkswagen from its #3 position, if Nissan and Renault would consolidate their numbers. Which they don’t.
  • Fourth, the deal is not at all as cooked as The Nikkei tries to make it appear.

Reuters, which has a sharp team of auto writers in Tokyo, says that the deal is far from final, and that negotiations “are likely to take a few more months.” Reuters’ sources say there is no deal ready to sign.

My sources give me the impression that Reuters’ sources are much higher qualified than those of The Nikkei.

The Nikkei jumped the gun again. It is understandable that the Nikkei wants to see one of theirs on the podium. But as a financial paper, The Nikkei should know the fine nuances between an alliance and a merger. The Nikkei should also know when someone wants to pump a stock.

Nissan’s stock closed down two percent today, in line with other Japanese automakers. The AvtoVaz stock jumped close to 10 percent today, fuelled by the rumor. Someone made a lot of money by feeding the Nikkei what the Nikkei eagerly eats up.


Get the latest TTAC e-Newsletter!

15 Comments on “Not True: “Nissan-Renault To Take Control Of Russia’s AvtoVaz”...”

  • avatar

    Someone made a lot of money by feeding the Nikkei what the Nikkei seems to be eager to eat up.

    BORIS: You see, Natasha, today American bloggers learn real meaning of term “pump and dump”…

  • avatar

    Whether Nissan-Renault would be third place, or how we calculate Nissan and Renault sales figures in the largely irrelevant game of OICA global automotive ranking is inconsequential.

    Crucially, Nissan and Renault are run as a single entity under the leadership of Ghosn, though financially they may be separate companies. The fact that Nissan is follows Renault into the Avtovaz should be an indication of this. Renault-Nissan have obvious plans for the company.

    The bigger question is if this deal is actually going to happen or not. We’ll see if Reuters or Nikkei is right, but I’ll tell you from experience that deals with Russian business tend to be highly unpredictable.

    • 0 avatar

      1.) The OICA ranking is anything but irrelevant. At least not for the companies on it. You can’t imagine the amount of engineering when it gets tight. It’s only irrelevant when you lose. To wit: When GM dropped off the #1 spot, the list did not matter. Now that the #1 spot is close, the list has become a fixation of Detroit. Volkswagen devised a 10 year plan to get to the top of the list.

      2.) Nissan and Renault are run under the same leadership. They share technology. They have cross share holdings. Otherwise, they are separate companies. They are listed separately at the stock exchange, the have separate boards, separate headquarters. Most importantly, they are two separate corporate entities that are not owned by another corporate entity. Joe Blow can ignore that, but the Nikkei, Japan’s Wall Street Journal, should know that.

      • 0 avatar

        re: Bertel

        The calculus of how we tabulate an automotive companies sales is irrelevant compared to the real tangible metrics of how a company operates.

        Renault and Nissan are a great example. They are, as you say, a cross-share holding, their stocks are traded separately, one is headquartered in Boulogne-Billancourt the other is in Yokohama.

        But what matters as a predictor of how the company operates and how they will operate in the future are based on more fundamental variables; Nissan and Renault share leadership, share a CEO, they share platforms, and engines, and technology, they share a corporate vision, they even share sponsorship in F1. They’re machinations are certainly more related than some of the more dubious groupings that the OICA makes.

        The second example is this very story, Nissan is following Renault into AvtoVaz. What it should indicate is that the larger entity, Nissan-Renault, under Carlos Ghosn, is looking to expand their investment into the Russian automotive market. They are willing to deal with Putin, the politics, and the greater risks involved in this market.

        There is a severe flaw in analysis if we view Nissan and Renault merely by the way they are traded on the stock market. Their motives, their leadership, their technology, their strategy, the way they operate are singular. The Nikkei is right, to view it in any other way would be a massive oversight.

      • 0 avatar

        OICA doesn’t make dubious groupings. OICA is the umbrella organization of the world’s auto manufacturer organizations. OICA simply tabulates what the manufacturers tell their organization.

        For instance, if Kia and Hyundai report separately, OICA tabulates separately. If Kia and Hyundai report together, OICA tabulates together. There is a reason why OICA says “For more details, please contact the individual OICA member associations directly.”

        As for Nissan & Renault, I can cut this discussion short: How about the Nikkei asking Carlos Ghosn: “Would you mind if we tell people that Nissan and Renault are one company? And while we are at it, may we consolidate your numbers?” Want to bet what answer they will get?

      • 0 avatar

        @L’avventura, you say “Their motives, their leadership, their technology, their strategy, the way they operate are singular.”

        Given the way manufacturing decisions are made at each of Nissan and Renault, it’s clear that this is not true. How many factories are currently shared by the two companies?

      • 0 avatar

        Bertel, OICA’s usage of what what ‘the manufacturer tells them’ is exactly why its irreverent. I believe you’ve described GM’s manipulation of Chinese partnerships in their OICA numbers in the past.

        This becomes a problem with semantics, Nissan-Renault has no real incentive to become the world’s “third” largest company or to declare themselves any other way unless they have a clear financial reason. Certainly its not something they can advertise in prime-time TV. OICA really isn’t on their radar in these terms. And really, does it really matter?

        What matters in this business is much more than bragging rights. Its suppliers, its platforms, its engines, its the million of little parts that makes a vehicle, all of which Nissan-Renault share.

        There is a bigger picture here. To attach yourself to Nissan-Renault’s third-place ranking and its comment in Nikkei isn’t very constructive. There are bigger ramifications worth discussion here…

      • 0 avatar


        Tell me exactly what’s unique about a Renault versus Nissan, or any of their other vehicles? The Renault Koleos is a Samsung SQM5, which is a Rogue, a Qashqai, a X-trail. A Renault Clio is a Cube, a Micra/March, a Modus, a Twingo, a Dacia Duster, a NV200. I could go on.

        We even have a Nissan GT-R engine in a Dacia Duster rally car, Sebastian Vettel drives an Infiniti which was previous a Renault.

      • 0 avatar

        It’s not a matter of semantics, it is a matter of responsible reporting. If GM says it produced 8,389,769 units in 2010, then I list that as 8,389,769 units. I may mention how GM arrived at that number, but I will not report it as 7,389,769 after deducting a million Wulings, which I, Bertel Schmitt, decided they did not deserve.

        If Volkswagen buys 19.9 % of Suzuki, then I will not unilaterally add 2,892,945 units to Volkswagen’s 7,140,000 – unless Volkswagen claims Suzuki’s cars in Volkswagen’s annual report as theirs. I won’t even add the Porsche numbers to Volkswagen until Volkswagen does it. Porsche and Volkswagen are much tighter connected than Renault and Nissan. But as long as both say they are separate, they are separate.

        If we want to change this, then we need to buy the companies, or send in our resumes in the hope that they hire us as CEOs. At the very least, we of the writing profession need to pick up the phone and ask: “Would you mind if we tell people that Nissan and Renault are one company? And while we are at it, may we consolidate your numbers?” Trust me, I made that call before I wrote the story.

        We can question decisions, but we may not change facts to make them fit our opinions. The first is criticism. The second is fraud.

      • 0 avatar

        Bertel, taking a holistic view of the Nissan-Renault relationship is not irresponsible reporting. If we want to nit-pick every detail of every story I think there a quite a few stories here that may be better served.

        The ramifications of Nissan-Renault taking AvtoVaz is significant, combined they do have the volume to take “third”, whether they are technically ‘third’ based on corporate structure, and whether they register that with the OISA, makes no difference in the fact that it will have significant ramifications of the types of cars that are made and the supplier base that supports it.

        I understand that you are really into sales data, and who takes the global sales crown based on various metrics that you have developed. But I have to say that its irrelevant to all but the one on top who gets the bragging rights.

        While I’d say the fact that TTAC goes through these motions is what makes this place special, and a caliber higher than the rest, however we shouldn’t take disproportional value on gloval sales ranking, and certainly shouldn’t use it to call Nikkei’s journalistic reputation into question (as you do tend to cite them a lot).

      • 0 avatar

        1.) The data I use in the annual rankings is not the sales data, it is the production data. This is to mirror the OICA methodology.

        2.) Who “takes the global sales crown” is not “based on various metrics that I have developed.” I do not measure or calculate. I report the numbers that are published by the companies in their official reports. If that simple fact is not understood, then I doubt that the rest is.

        3.) The ramifications of Nissan-Renault taking AvtoVaz are currently moot, because no deal is imminent. There have been discussions for months, and there most likely will be discussions for months. We will ponder the ramifications when there is a deal.

        4.) I will put the Nikkei’s, or any other outlet’s journalistic reputation into question when they make gross mistakes.

        5.) The Nikkei disagrees with your opinion that the ranking is irrelevant.

      • 0 avatar

        1.)Bertel, we are disagreeing single crucial issue. You are hung up on HOW these ranking are measured, this is irrelevant.

        If the deal goes through Avtovaz will be using Nissan-Renault rebranded vehicles, they will be using their technology, they may even share manufacturing capacity with Nissan and Renault branded cars. This is the relevant part.

        2.) Given Nissan-Renault’s past history, such as the Daimler deal, pursuing equal shares is something that they have a history of doing.

        3.) Also, even Reuters, which you proclaim in the article to have a “sharp team of auto writers” mention that Nissan-Renault “ranked third in global sales in 2010 with 7,276,398 vehicles, behind Toyota Motor Corp and General Motors Co and ahead of Volkswagen AG”.

        Near identical line you’ve were nit-picking Nikkei for.

  • avatar

    “Sebastian Vettel drives an Infiniti which was previous a Renault.”

    Not exactly. He drives a Red Bull powered by a Renault engine and sponsored by Infiniti. Formula 1 is very picky at what you can call the chassis, the engine or how you can change it once it was approved. You need unanimous approval of the other teams, and you lose all the money you were entitled from your results under the previous name.

    That’s why last year’s Sauber was called a BMW all season long even if BMW had nothing to do with the team anymore since it bailed out from F1 the previous winter (and that gave us an incongruous BMW powered by a Ferrari engine!) and also why, to Dany Bahar’s annoyance, the ex-Renault F1 team, now owned by a Luxembourg investment firm and sponsored big time by Lotus is still called a Renault on all the timesheets and by the commentators while there is another car on the grid called a Lotus which has nothing to do with Group Lotus. But that’s another story.

    Your point, however is very valid. Ghosn is pushing hard for integration and it has worked well so far, much better than any other maker alliance/merger at that level.

    Being French and living in Japan, it’s always interesting to see the difference in perception of the Renault-Nissan affairs and Carlos Ghosn. Basically, the French are permanently offended that Nissan, seen as a colony since Renault took control when it was on dire straits, would get such independence, better results and most of Ghosn’s attention, while in Japan everybody ignores Renault. Selling 12 cars per year or so in Japan does not help, obviously.

    The French, including the government who is also the largest shareholder of Renault, are paranoid that Ghosn will pull a trick and reshuffle the financial structure of the whole group so that suddenly Nissan will be on top. They get quite nervous then at every hint of a move such as this AvtoVaz thing where they don’t understand why the name of Nissan should be mentioned at all.

    That’s fun.

    • 0 avatar

      If you want to get technical the Renault engine is really a re-brandeding of Mecachrome’s engines. The decision of branding it a “Renault” or a “Infiniti” is merely the marketing whims of Ghosn.

      The point of course being that even the most mundane aspects of corporate branding are interchangeable between the two companies due to singular nature of Nissan-Renault. “Infiniti” is branded on the Red Bull’s F1 cars because Ghosen wants a stronger brand presence of Infiniti in Europe where its all but unknown, and Renault doesn’t have a luxury brand to speak of. Starting next year the Infiniti branding will be expanded.

      The shared sense of destiny between Nissan-Renault is clearly not be lost on its executive, and it shouldn’t be lost on journalists in this industry as well.

      • 0 avatar

        I agree with you that the actual structure does not reflect Ghosn’s vision of the whole thing. Another hint is that very recently, Ghosn pushed hard against the Industry Ministry’s first choice in order to put Carlos Tavares at the helm of Renault after the spygate fallout instead of a Renault guy. Tavares, although originally from Renault, matured as a manager at Nissan (and, crucially, as one of Ghosn’s closest collaborators).

        Regarding Mechachrome, the relation ressembles somehow what was going on between Honda and Mugen in the 90s. The core competency and design is still at Viry Chatillon but Mechachrome build most of the engines and are able to do is standalone, as they actually did under Flavio when Renault was out of F1 for a while. And rebranding the engine is of course an option. If you remember, it was even called “Playlife” at one point in the Benetton. That said, the engine is still currently Renault in the Infiniti Red Bull as it is in the (Group) Lotus Renault and the (Team) Lotus Renault.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • 28-Cars-Later: Ignorance must be bliss.
  • slavuta: “why should we support Putin?” Why do you feel that you support Putin? We’re free country...
  • slavuta: I think, a lot would be different. sure. Presidents must stop listening to the press.
  • slavuta: “most Americans are not that anxious to be part of a dictatorship” I came to America to be a...
  • slavuta: Jeff, I know only enough to imagine what is going on. But let me throw this at you from Q: Why...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Jo Borras
  • Mark Baruth
  • Ronnie Schreiber