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Tuesday, 26 May 2020 03:00 pm

Nissan and Renault have shelved merger plans to fix their troubled alliance: sources

Nissan has long resisted Renault’s proposals for a full-blown merger as executives felt the French carmaker was not paying its fair share for the engineering work it did in Japan, sowing discord that some feared could wreck the partnership.

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Renault and Nissan have shelved plans to push towards the full merger former leader Carlos Ghosn craved and will instead fix their troubled alliance to try to recover from the coronavirus pandemic, five senior sources told Reuters.

Nissan has long resisted Renault’s proposals for a full-blown merger as executives felt the French carmaker was not paying its fair share for the engineering work it did in Japan, sowing discord that some feared could wreck the partnership.

Now, with carmakers around the world reeling from the pandemic, the partners are planning to overhaul an alliance that largely failed to convert its global scale into a competitive advantage beyond the joint procurement of parts.

Both struggling carmakers are set to announce mid-term restructuring plans this week that will serve as a peace treaty designed to resolve the long-standing tensions, the five people familiar with the overhaul told Reuters.

“After the rain, the earth hardens,” said one senior Nissan source, citing a popular Japanese proverb that means relationships become stronger after a period of strife.

All five sources within the alliance, which also includes Mitsubishi Motors Corp (7211.T), declined to be named because they are not authorised to speak with media.

Nissan and Renault are each planning substantial restructuring and cost cuts that could affect tens of thousands of jobs, with the Japanese company to announce its measures on May 28 and its French partner likely to follow the next day.

Before that, Mitsubishi, Nissan and Renault are holding a joint news conference on May 27 during which they are expected to outline the philosophy behind their new “leader-follower” approach to the alliance.

The sources said the companies were unlikely to disclose many details at the events this week of how the new approach will be used to share costs as the companies were still working on specific projects.

However, the crisis at both carmakers has accelerated efforts to resolve the disagreements that have stymied collaboration and cost-sharing in technology and product development for five years, the sources said.

Mitsubishi, Nissan and Renault all declined to comment officially about alliance plans.

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Neha Pandey

Aware of her elements, Neha writes the best articles across industries including electronics & semiconductors, automotive & transportation and food & beverages. Being from the finance background she has the ability to understand the dynamics of every industry and analyze the news updates to form insightful articles. Neha is an energetic person interested in music, travel, and entertainment. Since past 5 years, she written extensively on sectors like technology, finance and healthcare.


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