Nissan and Renault’s representatives have been engaged in talks over the past few weeks to quell the disquiet that has hit the Nissan-Renault Alliance over the past few years.
The two automakers announced on Monday that they had reached a consensus that will now make their relationship more equitable. The ensuing unease was one of the factors that contributed to the downfall of the alliance’s former leader, Carlos Ghosn. Apparently, Nissan insiders feared that Ghosn would eventually merge the two companies thus diluting the Japanese control of Nissan (see logo below).
Progressively through the Alliance, Renault raked up a 43 % stake in their Japanese counterpart with voting rights on its board, while Nissan only held a 15 % stake in Renault and no voting rights. This has been one of the contentious issues within the Alliance. The Japanese company has felt that it was shortchanged since it produces more vehicles than Renault and thus deserves to have equal shareholding and voting rights. Previous reports also emerged of infighting as each of the companies was focused on electric vehicles which are seen as a major revenue source as many people are shifting to hybrid and electric vehicles.
A statement from insiders has indicated that the agreement would equalize both companies’ shareholdings. This effectively means that each of the companies will now hold a 15% stake in the other. The additional shares held by Renault would be transferred into a French trust whereby the trust would be under no obligation to sell them. The companies will now also have equal voting rights. (See Renault’s Logo below)
Further, Nissan has agreed to invest in Ampere, a subsidiary of Renault focused on developing electric vehicles and software. The company is expected to be publicly listed later this year. In its growth and expansion plan, Renault is seeking to tap Nissan’s engineering in the race to manufacture electric vehicles. It should be noted that Nissan was the first automobile maker to produce mass electric vehicles with the pilot car being the Nissan Leaf.
The Nissan-Renault-Mitsubishi Alliance has an ambitious plan of having over thirty (30) models of electric cars by the year 2030 and as such, the agreement comes at a critical time. The final agreement is pending approval by both companies boards.
Nissan- Renault Alliance
The Alliance has been in existence for more than 20 years. It was a win-win situation for the two companies in that Renault a French car manufacturer wanted to understand how Nissan, a Japanese car manufacturer had succeeded to expand its market in continents such as Asia, the USA, and Africa. Nissan, on the other hand, was cash-strapped and badly needed money to reduce its debts which almost brought its operations to a halt. Renault had the money that the Japanese Company so badly needed and from that, an alliance of convenience was born.
Carlos Ghosn was the chairman and CEO of the Alliance. In 2017, he stepped down as CEO but still remained the chairman before turbulence hit him. Carlos joined Renault in the year 1996 as a deputy to the then-CEO Louis Schweitzer. Ghosn was charged with turning around the fortunes of the French carmaker which he successfully did. In the formative stages of the alliance, he also managed to turn around the fortunes of the Japanese Automaker.
In 2016, Mitsubishi motors was involved in various scandals which saw it struggling. Nissan bought a whopping 34% controlling share in Mitsubishi Motors Corporation. The resulting company became known as the Renault-Nissan-Mitsubishi Alliance. This was one of the major and controversial decisions made by CEO Carlos Ghosn, who bought the shares at half price. Some experts wondered what gain Carlos would get by acquiring Mitsubishi Motors – a struggling company he could have invested the money in a more stable company.
Currently, the Alliance is arguably said to be the largest automobile group worldwide.
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