Saturday , October 23 2021

Is it possible for Renault and Nissan to survive independently?


New scenario

The president of the alliance – which is two decades old – helped, last year, for the company to save nearly $ 6 billion.

Carlos Ghosn is no longer president of the Renault Nissan Alliance. Last Thursday, the Japanese manufacturer fired him as president of the company. A few days earlier, Renault had not fired him but removed him from his duties, leaving the company in the hands of Thierry Bolloré, the number two company and now the CEO.

On the other hand, Hiroto Saikawa, was appointed more than a year ago as CEO of Nissan, running the company. A Japanese at Nissan; a Frenchman at Renault. Both the Japanese government want a merger; or the Frenchman that Nissan took more power in the diamond emblem.

Ghosn, who had planned to leave the group after completing the current strategic plan, by 2022, had tried in recent years to combine the Alliance. It clashed with the rejection of Emmanuel Macron and Shinzo Abe; Although the two governments expressed their intention to collaborate so that the Renault Nissan Alliance continued as before revealing tax fraud from its president, Mexico's Expansión website said.

Whether or not there was a coup by Nissan, which investigated Carlos Ghosn for months without notifying Renault executives, the truth is that Japan has spent more than five years claiming more weight in the Alliance's decision.

Renault has 43.4% of Nissan. This is the maximum shareholder and has the right to vote and veto on the advice of Japan. The second shareholder is a Japanese public pension fund with 5.28%.

Nissan has a 15% Renault but without the right to vote. And it is not the maximum shareholder. This is the French State which holds 15.01% of capital.

Japan felt betrayed since Renault, under the Florance Act, left Nissan without a voice for the umpteenth time. According to this regulation, if the permanent shareholders in the company for two years can duplicate their voting rights on the board, without the need to increase their participation. However, in May 2015, the French government increased its ownership to 19.75%, to prevent Nissan from acquiring land in the capital city of Renault.

In November 2017, to calm Nissan, Ghosn managed to get the French country to sell 4.75% to match its shares with Nissan. But the French Executive is one-tenth above the Japanese group, with 15.01% currently.

This relationship has been around since 1999. Nissan has no choice but to accept Renault's condition because they will fail. But in recent years, and with a serious financial crisis that crosses Europe, Nissan has maintained France's balance. Last year the Renault Group won $ 5.25 billion, of which its shares in Nissan contributed $ 2.799 million. In 2016, Renault won US $ 3,543 million, of which Nissan contributed US $ 1,638 million.

In terms of sales, Nissan leads. In addition, Japan is one of those who bought the Alliance's third leg, Mitsubishi, in October 2016, which had 34%. This Monday Mitsubishi will fire Ghosn as his president.

Between the two Japanese brands, they sold 8.84 million vehicles in 2017; Renault Group, 3.76 million.

Sentenced to be understood

The basis of the Alliance is synergy. If in 2016 they saved 5,000 million and last year nearly 6,000, the plan estimated that by 2022, 10,000 million would be reduced. Both companies (and Mitsubishi) focused their purchases on suppliers, engineering, supply chains and manufacturing.

In this last area, other stakeholders, Daimler, have had a strategic agreement since 2014 with the Renault Nissan Alliance. Just a few examples. Mercedes Citan vans are manufactured at Renault's Maubeauge France plant, which will also produce Nissan NV250. Daimler brand in Mexico Infiniti (Nissan premium brand) QX30. Or the Valladolid Motors factory produces small diesel engines that, for example, assemble Mercedes A classes.

Renault Nissan Mitsubishi has just sealed an agreement with Google, which will replace Microsoft as a cloud service provider and software for 2021.

Renault and Nissan have a venture capital fund of 1,000 million to capture new business opportunities in new mobility. And Nissan, with Leaf, and Renault with Zoe, are world leaders in the sale of electric vehicles. The union of the two companies was very profitable so it seemed complicated that they did not finally reach an agreement.

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