Renault Will Need Nissan More Than Ever After Fiat-PSA Deal
Renault Will Need Nissan More Than Ever After Fiat-PSA Merger
(Bloomberg) -- Renault SA Chairman Jean-Dominique Senard is under increasing pressure to fix the company’s relationship with ally Nissan Motor Co. after its other potential partner picked a different suitor.
The French and Japanese carmakers have had a rocky two-decade partnership that was further shaken by the chairman of their alliance Carlos Ghosn’s arrest a year ago -- to the extent that Renault earlier this year attempted a merger with Fiat Chrysler Automobiles NV. With Fiat Chrysler now merging with French peer PSA Group, Renault is left clinging to its Japanese companion.
Carmakers need the heft and scale provided by partnerships to face challenges from electrification, the rising popularity of ride-sharing and the emergence of self-driving vehicles. Sticking to the Nissan pact, and trying to improve it, now represents Renault’s best bet to remain competitive in that increasingly cut-throat landscape.
“Renault needs it more than Nissan,” Steve Man, an analyst at Bloomberg Intelligence in Hong Kong, said of the alliance. “They all need to work out those issues and move on and become more profitable.”
French finance minister Bruno Le Maire called Senard Wednesday to emphasize the need to define the strategy of the alliance, he told reporters after PSA unveiled its agreement with Fiat.
“The alliance remains one very important one in the world and I’m very confident that in the next months, you will have a reinforcement of this industrial strategy for Renault and Nissan,” Le Maire said. “That’s the priority of the French state.”
At the root of the tensions between Nissan and Renault has been a lopsided shareholding structure, with Renault holding 43% of the Yokohama-based carmaker and Nissan owning just 15% of Renault. Given its bigger size and superior earnings performance in recent years, Nissan has long demanded more sway in the alliance, including that Renault reduce its stake.
With Fiat no longer a viable partner option for Renault, the French company has less negotiating power with Nissan, said Tatsuo Yoshida, an analyst at Bloomberg Intelligence in Tokyo.
At a meeting between the companies this week in Japan, as the deal to combine Fiat and PSA headed for the finish line, Nissan executives didn’t explicitly ask Renault for a reduction in the stake, according to people familiar with the matter, who asked not to be named discussing private deliberations.
A Renault spokesman declined to comment. A Nissan representative said there has been no change in the company’s stance regarding the alliance.
Senard told a French radio channel this month that lowering Renault’s stake in Nissan wasn’t on the agenda, though he cautioned “you can’t exclude anything.”
In the same radio interview, Senard gave Renault and Nissan just months to amend the union.
“If in 2020 we don’t extract the whole virtuous potential of this alliance, I’ll consider that I and my teams have failed,” he said.
Earlier this year, the Renault chair pushed for the Fiat merger despite Nissan’s reluctance, and their lack of support for the deal was a chief contributor to its de-railment. Nissan wants to focus on fixing the partnership with Renault and viewed the addition of Fiat into the mix as too big of a distraction, according to one of the people.
In an attempt to restore trust, both Nissan and Renault have made changes in top management. Nissan replaced its CEO and Renault has embarked on its own chief executive search after ousting Thierry Bollore. Both companies are slowly turning the page on the era of Ghosn, who held their alliance together for years.
--With assistance from Tsuyoshi Inajima, Ania Nussbaum and Caroline Connan.
To contact the reporters on this story: Kae Inoue in Tokyo at kinoue@bloomberg.net;Kyunghee Park in Singapore at kpark3@bloomberg.net;Masatsugu Horie in Tokyo at mhorie3@bloomberg.net
To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Ville Heiskanen, Emma O'Brien
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