By on May 18, 2018

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Carlos Ghosn, chairman of the Renault-Nissan-Mitsubishi Alliance, has made it clear that his ideal solution for all three automakers is to stop pussyfooting around and enter into a full-on merger. Officially, there’s no deal in the works. “Any discussion about a share transaction involving Renault, Nissan or the French state is pure speculation,” explained alliance spokesman Jonathan Adashek earlier this month.

Unofficially, things are quite different. Renault and Nissan are both committed to maintaining a healthy and strong relationship, but the French government is hesitant to even suggest the possibility of abandoning its stake in Renault. For political reasons, it can’t seem as if the company is being relinquished to Japanese interests vis-à-vis a corporate takeover. Therefore, an accord has to be reached to provide Renault with some level of autonomy — or a lie has to be crafted to make it look that way.

While Ghosn previously denied any possibility of a merger, he began claiming it was a very real possibility this year. Having already developed a structure that would see management of Renault, Nissan, and eventually Mitsubishi Motors overseen by a Dutch foundation based in Amsterdam, the chairman suggested it (or something like it) could also serve as a mediator for their integration as a singular global automotive group. But the French Ministry for the Economy and Finance said that wouldn’t be a possibility. So what’s the solution?

Baby steps.

Nissan wants control of Renault, but it can’t have it if it makes it appears too eager. The kicker is, it doesn’t want a merger if it perpetually has to check in with the rest of France on every single decision. As the more profitable automaker, Nissan feels entitled to call the shots. But Renault currently has a 43.4 percent stake in Nissan, while Nissan only holds a 15 percent stake in Renault — effectively giving the French automaker control.

Whether or not Nissan can wrestle away France’s share of Renault, chief executive Hiroto Saikawa said it is important that the Japanese firm expand its role within the alliance. According to Bloomberg, Nissan executives are arguing they have the better engineering capabilities and want to lead crucial operations such as product development.

“The answer we seek is, we need to ensure the autonomy of the companies will be maintained in a way we are having now,” Saikawa said during Nissan’s earnings announcement. “Even in the future leadership may change, the same pattern of work will be continued in an environment and the question is how can we ensure that environment.”

Both Ghosn and Saikawa are nearing retirement. The fear is that, in their absence, the alliance could someday dissolve. But what are the two companies to do when they both want control and have relatively reasonable claims as to why they are the better choice?

“I spoke about the irreversibility of the alliance, which means that we have a system and the process by which this alliance goes on independently of who is leading it,” Ghosn said last month. “I need to take into consideration the fact that there are some reasonable concerns of people asking me: ‘What do we do? Who designates the alliance?'”

The current strategy has been to shuffle management so that executives from each automaker are well-represented. Executives from both companies have been placed into important positions at the other. The alliance also shares about one-third of its current powertrains and intends to more than double that amount by by 2022. As for that unofficial merger, clandestine negotiations are still in the works. But Ghosn has pitched an idea that would allow Nissan and Renault shareholders to cash out their existing stock and transition to a unified one.

Backup plans to ensure greater cooperation without a merger include Nissan increasing its stake in Renault to 25 percent to procure some voting rights of its own, according to Saikawa. However, this would just be another stepping stone toward becoming one company. Honestly, it just sounds like they need to craft a solid prenuptial agreement. Even if the wedding gets called off, they both plan on living together anyway.

Attempting to downplay the corporate romance as much as possible, Nissan’s Saikawa said Thursday that the important decisions regarding the alliance should be made within a year. Presumably, that includes details on the merger everyone but Ghosn is trying to keep a secret.

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13 Comments on “Baby Steps: Nissan Seeks Stronger Ties With Renault, Merger Remains Possible...”

  • avatar

    Now watch the French government buy more shares in Renault and then buy more shares in Nissan…. it’s the French way!

  • avatar

    Two mediocre brands from incompatible cultures, with both specializing in selling mediocre cars to sub-prime clientele and unprofitable EVs to eco-weenies – its a marriage made in heaven.

    • 0 avatar

      It seems to me that Nissan has actually profited from their association with Renault, and vice-versa.

      Nissan is certainly doing better under/with Renault than their short stint with Alfa Romeo in the early 1980s. Remember the Alfa Romeo Arna? That was mediocrity with a capital M. It combined the worst features from each brand, namely indifferent Alfa Romeo quality and dull Nissan design. At least the Alfa Romeo Boxer engines were superb.

    • 0 avatar

      Nobody is more mediocre than Ford after announcing it was getting rid of it’s sedans. I guess the Altima and Maxima had Ford executives shaking in their boots.

      • 0 avatar

        “Nobody is more mediocre than Ford after announcing it was getting rid of it’s sedans.”

        The truth is that practically no one except fleet buyers actually cared about Ford’s sedans.

        • 0 avatar

          >>The truth is that practically no one except fleet buyers actually cared about Ford’s sedans.

          More so w/ Nissan. Nissan junk drives better cars out of the market because uninformed buyers buy largely on price and Nissan is a junk brand w/ KMart class products at discount prices.

    • 0 avatar

      Rover and Honda actually did well from each other, Honda taught Rover how to properly build cars, and Rover taught Honda how to make cars that weren’t depressing to sit in.

      By the early 90s 200/400 series / Honda Concerto they were putting out some great cars.

      Only BMW taking over put the spanner in the works.

  • avatar

    Heck, I was just coming to grips with the fact that 2+2 = 4, and I was pretty settled on that answer for now. Not so much with this equation.

    2+2 = maybe 2.5?

    So the miracle CEO Ghosn will perform a Houdini move and combine Nissan, a rental lot leader, with Renault, a company brimming with technology and a very reasonable compensation structure for their workers.

    This has “synergy” written all over it. Just wait until my Nissan buddies down the road kicking out 650,000 cars per year find out about the Renault work schedule.

    I need to get a couple of bistros set up to cater to the new work rules. I could probably achieve the same goals with a Hooters franchise.

  • avatar

    Wouldn’t the simplest solution be for Renault to buy Nissan. This is how Porsche solved their buyout of VW. Instead they just had VW buyout Porsche, and problem solved.

    • 0 avatar

      I wonder why Renault did not wait until Nissan went bankrupt and then just took over Nissan. Now two subprime automakers Nissan and Mitsubishi want to take over Renault? If it was American government it would be happy to oblige but for French people it would be insult. Japan can forget about that. And when Nissan goes bankrupt next time (it is just matter of time) – who is going to help? Sergio?

  • avatar

    Truly a Rogue Alliance!

    What will they do for an Encore?! ;-)

    (Remember to tip your server!)

    Fine, I’ll turn over a new Leaf and stop these jokes!

    (::Drops mic!::)

  • avatar

    I just want us to get Clios/Meganes/Scenics with decent engines. Is that too much to ask?

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