Proposed FCA-Renault Merger Puts Nissan in a Awkward Spot

Steph Willems
by Steph Willems
proposed fca renault merger puts nissan in a awkward spot

Nissan has long felt like an unequal partner in its alliance with Renault, and has continually resisted pressure to strengthen its ties with the French automaker. With a potential merger between Fiat Chrysler and Renault now in the discussion phase, the Japanese automaker, having just suffered a year of sales and profit losses, finds itself staring down the barrel of further inequality.

Should the Italian-American and French companies merge, Nissan’s influence would shrink by half. Still, the automaker claims it’s open to discussion.

Currently, Nissan holds a 15-percent stake in Renault, with no voting rights, versus Renault’s 43.4-percent stake in its own business, plus voting rights. Under a merger scenario, the new entity would maintain its stake in Nissan, though Nissan’s stake in Renault would shrink to 7.5 percent.

Similarly, the French government would see its 15-percent stake in Renault drop to 7.5 percent.

The concern is that Nissan’s influence in the relationship would erode further, weakening its bargaining power and kiboshing future attempts to assert itself. There’s also the issue of technology and platform sharing, something the Renault-Nissan-Mitsubishi Alliance was built on. As Hans Greimel posits in Automotive News, what becomes of Nissan’s truck presence in North America under such a scenario?

FCA CEO Mike Manley is eager for a Ram-badged midsize truck to compete against Ford, General Motors, and Toyota. While the architecture underpinning Nissan’s replacement for the ancient Frontier, a new platform spearheaded by Mitsubishi, could be of use to FCA, Nissan’s full-size Titan and larger Titan XD would find themselves in an awkward relationship with Ram’s far more popular 1500 and HD.

Meanwhile, the French government has demands.

As reported by Reuters Tuesday, French finance minister Bruno Le Mair told local media that, while the proposed merger holds opportunities for Renault and the European auto industry, his government’s support hinges on a number of guarantees. Not surprisingly, French jobs are top of mind.

“The first: industrial jobs and industrial sites. I told the Renault chairman very clearly that it was the first of the guarantees I wanted from him in the opening of these negotiations. A guarantee on the preservation of industrial jobs and sites in France,” Le Mair said.

The minister added that his country desired adequate French representation on the entity’s board, as well as a guarantee that the country be a leader in the development of electric vehicle batteries. He also wished to see the merger occur “within the framework of the alliance between Renault and Nissan.”

Nissan’s CEO, Hiroto Saikawa, told a Japanese news outlet on Tuesday that “strengthening the alliance and constructive discussions are forward looking, and we are open to constructive discussions.”

As news of the potential merger broke Monday, the Italian government also took interest, mulling a stake in the combined entity to offset its partial French ownership.

[Image: Memory Stockphoto/Shutterstock]

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5 of 11 comments
  • Tsavo Tsavo on May 28, 2019

    Too bad, Nissan. Throwing Ghosn in jail is now going to bite you in the ass in a big way.

  • Sportyaccordy Sportyaccordy on May 28, 2019

    I'm kind of amazed that nearly 20 years after its salvation Nissan is right back on the brink of collapse. Someone on another comment thread about this whole thing called Nissan the Chrysler of Japan. Judging by these proceedings that sounds like wishful thinking

    • See 2 previous
    • Lorenzo Lorenzo on May 30, 2019

      @don1967 Well, it's no worse than running, because bears can run faster, nor playing dead, because bears eat dead things. There's always the GM way of stripping down higher level cars until they're just a few dollars more than an optioned up smaller model, causing people to buy the bigger car for just a little more money. There doesn't seem to be a bear analogy for that.

  • Jim Bonham Thanks.
  • Luke42 I just bought a 3-row Tesla Model Y.If Toyota made a similar vehicle, I would have bought that instead. I'm former Prius owner, and would have bought a Prius-like EV if it were available.Toyota hasn't tried to compete with the Model Y. GM made the Bolt EUV, and Ford made the Mach-E. Tesla beat them all fair and square, but Toyota didn't even try.[Shrug]
  • RHD Toyota is trying to hedge their bets, and have something for everyone. They also may be farther behind in developing electric vehicles than they care to admit. Japanese corporations sometimes come up with cutting-edge products, such as the Sony Walkman. Large corporations (and not just Japanese corporations) tend to be like GM, though - too many voices just don't get heard, to the long-term detriment of the entity.
  • Randy in rocklin The Japanese can be so smart and yet so dumb. I'm America-Japanese and they really can be dumb sometimes like their masking paranoia.
  • Bunkie The Flying Flea has a fascinating story and served, inadvertently, to broaden the understanding of aircraft design. The crash described in the article is only part of the tale.