Tuesday, March 21, 2023
News Renault and Nissan Make their Alliance More Equal, Target South America

Renault and Nissan Make their Alliance More Equal, Target South America

The Renault-Nissan-Mitsubishi alliance is being restructured to alleviate internal tensions.

  • The Renault-Nissan-Mitsubishi alliance has been rocky for many years.

  • Renault will cut back its stake in Nissan, while both Japanese companies will take a share of the French company’s new EV program.

  • Nissan will make a new Renault model in its Mexico factory.

The Renault-Nissan-Mitsubishi alliance has been an unhappy one many times over the 24 years of its existence, but both majority partners now hope things will get better.

This is because Renault and Nissan have agreed to restructure the Alliance to alleviate internal tensions and focus on developing new products and focusing on new markets.

Renault will thus sell most of its 43% stake in Nissan to end up with 15% of the Japanese company’s valuation, which is the same stake Nissan owns in Renault.

This discrepancy in the level of control between both automakers led to most of the complaints from Nissan, who felt that Renault didn’t leave it enough free reign over its own products and executive decisions.

In addition, Nissan was unhappy about the interference of the French government, which has owned a stake in Renault since 2015.

This imbalance was due to the fact that the alliance was formed when Renault saved Nissan from Bankruptcy in 1999. Mitsubishi only joined the partnership in 2016 when Nissan took a large stake in the smaller automaker.

The French automaker will not sell this 28,4% stake in Nissan immediately, however, since its market value is much lower than it was a few years ago at the moment.

In exchange for a more balanced power dynamic, Nissan has agreed to purchase up to 15% of the shares from Renault’s upcoming Ampere electric vehicle division, and Mitsubishi confirmed it will also participate in this project.

Keeping the alliance afloat is very important for all three companies since the electrification of the automotive industry has made it impossible for smaller automakers to survive on their own, with some experts predicting that only five or six conglomerates will be able to keep producing cars in the future.

The restructuring also includes a new focus on emerging markets such as India and South America, where Nissan will manufacture a new Renault model in its factory in Mexico.

In exchange, Renault is expected to provide Nissan with small pickup trucks it will build in Argentina.

Both companies will also work together to launch two new electric vehicles in South America over the coming years.

Production facilities could also see some changes in the coming years due to inflation and globalization, which can make some countries more or less attractive for the alliance.

Indeed, Nissan says that its British factory in Sunderland might not be contracted to build the next generation of the Juke and Qashqai SUVs since production there now costs too much compared to the company’s 43 other global assembly plants.

It will be interesting to see if these changes will be sufficient to keep both Renault and Nissan happy in the alliance while also making it prosper in the automotive industry.

Source: BBC

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