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Renault-Nissan can overhaul alliance without ownership change, chairman says

Stock MarketsJan 30, 2020 08:47AM ET
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© Reuters. FILE PHOTO: Renault, Nissan and Mitsubishi chiefs hold a news conference in Yokohama

By Naomi Tajitsu

YOKOHAMA, Japan (Reuters) - Renault (PA:RENA) and Nissan (T:7201) can improve their alliance without altering their ownership structure, the chairman of the Franco-Japanese partnership said on Thursday, rolling back a previous push toward a full-blown merger that rankled Nissan.

The comments from Jean-Dominique Senard point to an emphasis on more cooperation and operational efficiency as the automakers and junior partner Mitsubishi Motors Corp (T:7211) strive to rebuild profits, which have slumped in the wake of former chairman Carlos Ghosn's arrest in 2018.

Renault and Nissan (T:7201) have struggled to repair a relationship badly strained after the arrest of Ghosn, who fled Japan to his childhood home of Lebanon at the end of last year. He has been charged with financial misconduct, which he denies.

"We all share a sense of urgency," Senard told reporters in Yokohama, after he and the heads of the three automakers met. He said there was "no other option" but to change, but added reforms could be made without a shift in the capital structure.

"The priority as clearly stated was to increase significantly the efficiency of the alliance," he said.

Renault SA, which is part-owned by the French state, owns 43% of Nissan Motor Co, while the Japanese firm has 15% of the French carmaker, with no voting rights - a structure that has caused friction in Japan, given Nissan is the larger of the two.

Renault has previously indicated a desire to move toward a full merger, something Ghosn is said to have championed and which Nissan has strongly opposed.

Nissan CEO Makoto Uchida told reporters that in order to leverage their respective strengths, Nissan would take an operational lead in China, where it leads its partners in sales, Renault on its home turf in Europe and Mitsubishi in southeast Asia, an area it dominates.

A similar model will be taken for engineering, where one company will lead in developing a key technology that would then be shared among the partners, the companies said in a statement.

Fuel economy credits would be pooled by the three in Europe, they added.

The three companies, which together sold nearly 11 million vehicles in 2018, will announce revised mid-term plans by May, Uchida said.

The automakers need to improve profitability to compete with global rivals, which are investing heavily to develop electric vehicles, self-driving cars and other new technologies that are transforming the industry.

Reuters reported this week that Nissan was set to eliminate at least 4,300 white-collar jobs and shut two manufacturing sites as part of broader plans to add at least 480 billion yen ($4.4 billion) to its bottom line by 2023.

Renault-Nissan can overhaul alliance without ownership change, chairman says

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