Renault and Nissan foresee greater ‘freedom’ under reset of alliance
French and Japanese carmakers will no longer be bound by need to ‘compromise’, says De Meo
Renault and Nissan have gained greater “freedom” to pursue their own ventures under a major reset of their strife-riddled 24-year alliance, the boss of the French carmaker has said.
The French and Japanese carmakers will no longer be bound by the need to “compromise”, or to work together in areas where they cannot both benefit, Luca de Meo told the Financial Times.
The pair nevertheless are set to announce several new joint manufacturing projects in India, Latin America and Europe on Monday as part of a historic shake-up of their partnership, after the boards of both groups approved a deal that equalises their cross-shareholdings in each other, a longstanding source of dispute.
The marriage between Renault and Nissan had been intended to generate vast savings but has, in reality, been marred by suspicion and infighting, which have broken through into public sight since the arrest in 2018 of former boss Carlos Ghosn.
De Meo likened the businesses to a couple in a rut after 25 years together, whose needs had diverged on some fronts. “The conversation becomes not as exciting as before, and then one of the two of you stands up from the sofa and says ‘I’m going out, I’m going to see friends’.”
The two companies were attempting to foster a new mindset and remove layers of constraints to prevent strains in their partnership turning into a full-blown “divorce”, he added, while retaining some of the benefits of the alliance, like their shared clout in areas such purchasing from suppliers.
“Renault regains its strategic agility and the freedom to do what is good for us, which is not always what is good for the alliance,” De Meo said.
The reset comes as Renault is trying to speed up its development of electric cars in its European heartland, while Nissan’s next steps may be more focused on improving earnings in the markets where it is more focused, like the US or China.
As part of the shake-up, Renault will over time trim its 43 per cent stake in Nissan to 15 per cent, while Nissan will gain voting rights for its own 15 per cent holding in Renault.
But the deal also entails ripping up a shareholder agreement that effectively stifled much of Renault’s voting rights in Nissan and had created a form of “operational deadlock”, De Meo said.
Nissan has also agreed to invest in “Ampere”, a new Renault division that will house its electric vehicle and software technology, which the French company is spinning out as part of a major corporate overhaul.
Until recently, talks between Renault and Nissan had been complicated and occasionally heated, people familiar with the discussions have said, following months of negotiations.
The new joint ventures between Renault and Nissan were agreed on as projects that would benefit both and could produce “billions” in value “if it works out perfectly, which it will not”, De Meo said. He added that it was more likely to produce “hundreds of millions” in time.
Philippe Houchois, a motor industry analyst at Jefferies, said the alliance reset potentially gave both companies flexibility to pursue other partnerships.
Renault already has several collaborations with China’s Geely, which will invest in Renault’s engine business, codenamed “Horse”. The pair also work together in South Korea, and have a project between Renault’s Alpine brand and Geely’s Lotus.
Houchois added that the joint projects were “a side issue”. A much bigger question was “how Renault manages Horse and Ampere, and how does Nissan address its weakness in China and fix the US”.