Written by / Zhang Ou
Edit/Windsor
Design / Shi Yuchao
Source: Automotive News Europe/Reuters
This electrification revolution in the automotive industry has spawned more and more win-win cooperation. At the same time, there are some precarious relationships that are in dire need of change.
According to people familiar with the matter, France's Renault Group is considering selling some of its shares in Nissan To raise funds for its own electrification development and ease long-term tensions between the two sides.
Nissan may take advantage of the trend to buy back Renault's 1.83 billion shares (worth 7.1 billion euros), and Renault may also seek other acquirers for some of its shares in Nissan Motor, with the potential choice now being China's Zhejiang Geely Holding Group.
Spokesmen for Renault and Nissan declined to comment.
(Source: Financial Times)
Reinvent the alliance with their own development as the foundation
For a long time, the unbalanced cross-shareholding structure between the two sides has been a thorn in the minds of Nissan executives - Renault owns 43% of Nissan's voting shares, and Nissan owns only 15% of Renault's shares, and has no voting rights, subject to Renault.
By cutting its stake, Renault has sought to choose a delicate path: repositioning the 23-year-old alliance, maintaining friendly ties and trying to avoid disintegration.
Renault CEO Luca de Meo began charting major structural changes in February, considering splitting the EV business and going public separately, followed by uniting the traditional business with potential partners.
At this point in time, the originally uneven road of transformation has been hit hard by the Russian-Ukrainian conflict. As the automaker with the highest sales in Russia, Renault and its alliance partners had to opt out of one of its most important markets.
Renault will write off €2.2 billion worth of assets in Russia, including a manufacturing plant in Moscow, which is about one-third of its market capitalization, and assess the future of shares in the group's subsidiary AvtoVAZ, possibly transferring ownership to local investors.
All this increases the urgent need for funding. The spin-off of the electric vehicle business and the sale of Nissan's shares are both effective ways to obtain sufficient cash flow.
Renault's eviction could include Nissan's assets, the sources said. Nissan also has the potential to become a partner in its traditional fuel vehicle business.
On April 22, Renault Chief Financial Officer Thierry Pieton revealed that the two companies were collaborating on structural reforms at Renault.
If Renault's stake is reduced to 15%, it is the same level of nissan's ownership of Renault, and at current prices, Renault can receive about 4.65 billion euros. Once the stake changes, the operating agreement that governs the partnership (called RAMA) may also have to be modified.
And Nissan will be in a better position to buy back its shares. The Yokohama, Japan-based company has $15.6 billion in cash and equivalents on hand and is gaining momentum, with operating profit expected to be positive for the first time since fiscal year 2019.
Ashwani Gupta, Nissan's chief operating officer and former Renault Group executive, will travel to Paris at the end of April to meet demeo first. Executives from both companies will also hold a broader meeting in Tokyo in May.
Carlos Ghosn, the central figure of the Renault-Nissan alliance for 23 years
Looking back at 23 years of peer paths
Renault and Nissan's "Franco-Japanese Alliance" was formed in 1999 and was led by Carlos Ghosn. At the time, he was an executive sent to Japan to reverse Nissan's decadence after Renault acquired a controlling stake in Nissan.
Ghosn has since become the most important core figure in the Renault-Nissan alliance.
He was arrested in late 2018 on charges of financial misconduct and subsequently dismissed as chairman of the coalition. As a result, this long-standing relationship has been in turmoil.
Below is a timeline of key events in the league's history.
In 1996, Ghosn joined Renault as Executive Vice President. At the time, the centuries-old French company was struggling with declining profitability. In his second year in office, Ghosn, the "cost killer", unveiled a cost-cutting plan of 20 billion francs (about 23 billion yuan), and by the end of 1998, Renault's profitability had successfully jumped threefold.
In March 1999, Renault rescued the indebted Nissan, which had been losing money for three consecutive years. Later, Ghosn announced Nissan's revival plan, with the goal of returning to profitability in fiscal year 2000. After cutting 21,000 jobs (14 percent of the workforce), closing some local factories and dissolving Nissan's Keiretsu parts company, Nissan achieved its profitability target a year ahead of schedule. Ghosn also made a name for himself in Japan.
In 2000, Ghosn began working as CEO of Nissan. By the end of the year, Nissan had contributed about half of Renault's annual net profit, and it remained so for the next decade.
In 2002, Nissan announced a three-year growth plan for the Nissan 180, with the goal of increasing global sales by 1 million units by September 2005.
In 2005, Nissan failed to meet its global sales growth targets. Subsequently, a three-year "Value Enhancement" program was announced to maintain the highest level of operating margins in the industry, achieving global sales of 4.2 million units and a 20% return on invested capital by March 2009. Ghosn also became president and CEO of Renault that year.
In 2006, Ghosn announced the Renault Pledge 2009, positioning Renault as Europe's most profitable car manufacturer.
In 2008, Nissan's "value enhancement" program failed again, and a five-year "GT 2012" program was announced, focusing on investment, but was canceled due to the financial crisis.
In 2010, the Renault-Nissan Alliance and the Daimler Group launched a partnership. Initially limited to 3 projects, mainly in Europe, the scope of the cooperation was expanded over the next 10 years to 12 projects across three continents.
In 2011, Nissan began its "Power 88" mid-term plan, which includes a goal of achieving an 8% global operating margin and 8% global market share by 2017. In 2012, Nissan focused on increasing its market share in the U.S. to 10 percent. Renault's operating profit fell for the second consecutive year due to slower sales in Europe.
In 2013, Renault and Nissan announced a "common module family" program aimed at developing and manufacturing cars at low cost. This new system expects to reduce the cost of components of the alliance by 20-30%. The following year, they incorporated more features, with the goal of saving 10 billion euros a year by around 2022.
In October 2016, Nissan acquired a 34% controlling stake in Mitsubishi, with Ghosn as chairman. He became the head of all three partners.
In 2017, Ghosn said he would resign as CEO of Nissan in April to focus on improving Renault's profitability. That same year, Ghosn announced the "2022 Alliance M.O.V.E.", setting a comprehensive target for Renault, Nissan and Mitsubishi to achieve synergies of €10 billion per year. The alliance has sold more than 10 million vehicles worldwide, making it one of the world's largest automakers.
In 2018, Ghosn was arrested in Japan for underreporting wages for more than a decade. He was also charged with other crimes, including embezzlement of Nissan funds. He was later fired and no longer served as president of the league.
In 2019, the league appointed Jean-Dominique Senard as the new chairman, and Renault began trying to tighten its capital relationship with Nissan, escalating tensions between the two.
In 2021, Renault and Nissan sold their stakes to Daimler AG, ending the solid triangular strategic relationship that had lasted for 11 years.
The current president of the Union, Jean Dominique Senal
The turmoil has passed, waiting for Nirvana to be reborn
Ghosn's arrest in 2018 is undoubtedly the biggest trigger for the turmoil in the alliance. Tensions caused by the asymmetry of the relationship between the two companies surfaced after a long time of lurking, nearly destroying the alliance.
It was not until 2020 that the Franco-Japanese alliance resumed some degree of normal operation under a new leadership. Renault, Nissan and Mitsubishi each launched their own revival plans, including layoffs, downsizing lineups, factory closures and deep administrative cost cuts.
At the time, the three companies divided the world into different market segments: Renault's leadership in Europe, Nissan's leadership in the United States, China and Japan, and Mitsubishi's leadership in Southeast Asia complemented each other.
Negotiations aimed at rebalancing the coalition were originally scheduled for 2019 but have been shelved until now due to more pressing operational and management issues.
35 new models will be launched in 5 years, 90% of which will be completed on the jointly established electric vehicle platform
On January 27, 2022, alliance partners Renault, Nissan and Mitsubishi Motors jointly announced that they will invest $26 billion in electric vehicles over the next five years.
It was also the first major announcement of the Franco-Japanese alliance in two years. Electrification reforms include the joint launch of 35 new electric vehicles over the next five years, more than three times the 10 electric vehicles already sold by Renault, Nissan and Mitsubishi. A common strategy will also be pursued to ensure that global battery production capacity reaches 220GWh by 2030.
De Mayo said the alliance has produced more than 1 million electric vehicles since 2009 and expects to produce 1.5 million a year as early as 2026.
The leaders of the three companies outlined vision 2030 in an online press conference, painting a picture of unity and tensions that appeared to ease.
"Three years ago, the alliance was experiencing a crisis unprecedented in history, rooted in a lack of trust." The successor president, Senal, said, "This period has passed. We have rebounded rapidly at a speed and intensity beyond everyone's imagination. Sennar said the close relationship of the alliance is completely inseparable.
Negotiations to reshape the Renault-Nissan alliance could take months.
This article was originally produced by Automotive Business Review
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