Per reporter: Pei Jianru Per reporter Per editor: Sun Lei
A few days ago, a rumor involving Renault, Nissan and Geely Automobile has aroused the attention of the industry.
Renault is considering selling its stake in part of Nissan, a move that could raise billions of euros for its electrification strategy and ease long-standing tensions with its alliance partners, Bloomberg reported. Nissan may be willing to buy some of The Nissan shares held by Renault, and Renault may also seek other buyers, and Geely Automobile is also one of the options.
In response to this matter, the Daily Economic News reporter asked the relevant responsible persons of Renault China, Nissan China and Geely Automobile on April 25, and the responsible persons of Nissan China and Geely Automobile only said that "this cannot be commented on", and the relevant person in charge of Renault China has not replied as of press time.
According to public data, Renault shares rose 8.3 percent on the Paris exchange after the news broke, and Nissan shares fell 4 percent in early trading on Monday, the biggest intraday drop since March 11.
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According to public information, Renault holds a 43.4% stake in Nissan (1.83 billion shares) with a total value of 983.5 billion yen (about 7.1 billion euros), and has a lot of control over Nissan. Nissan, on the other hand, holds only 15 percent of Renault's shares and has no voting rights. For more than two decades, the imbalance in the cross-shareholding structure has been a problem for Nissan.
Image source: Daily Economic News Infographic
Because of this, Renault may want to reduce its stake in Nissan to 15% to regain a balanced alliance, but it is unlikely to sell all of its shares. At current prices, Renault could receive around €4.65 billion in funding, helping Renault CEO Luca de Meo to plan a major structural reform that began in February. But the above report has not been officially confirmed.
According to Luca de Mayo's plan, its hybrid and internal combustion engine business will grow with partners and realize the spin-off of the electric vehicle business. After the independent operation of the electric vehicle business, Renault will improve operational efficiency with a more targeted business model, capital allocation and teamwork.
Renault Chief Financial Officer Thierry Pieton recently said that the company is actively promoting the split of the electric vehicle business, but the realization of the plan still needs to be approved by alliance partner Nissan. "The two companies are working together on structural reforms at Renault, and Nissan is already involved, which is what we want to discuss with them." Thierry Pieton said.
According to Bloomberg, Ashwani Gupta, Nissan's chief operating officer, will travel to Paris next week to discuss with Luca de Mayo. In May, Renault and Nissan executives will hold a broader meeting in Tokyo.
The alliance plans to invest 23 billion euros in electrification
In fact, since the "Ghosn Incident", both Renault and Nissan have been trying to recover. For example, Renault released a new strategic plan for "Renaulution" and Nissan released a "Nissan NEXT Enterprise Transformation Plan", and both have received certain results.
According to official data, in 2021, Renault's revenue was 46.2 billion euros, an increase of 6.3% year-on-year, and net profit was 888 million euros, achieving the first turnaround since 2019. According to the latest data from Nissan Motor, in the first three quarters of fiscal 2021 (April 1, 2021 to December 31, 2021), Nissan Motor's consolidated net income was 6.15 trillion yen, net income was 201.3 billion yen, and its net income for the full year of fiscal 2021 is expected to be 8.71 trillion yen and net profit of 205 billion yen.
Negotiations aimed at rebalancing the Renault-Nissan-Mitsubishi alliance were held in 2019, but were put on the back burner due to more pressing operational and management issues and have only now been put back on the agenda.
Image source: Per reporter Zhang Jian photographed (data map)
Back in May 2020, the Alliance released a new strategy that identified a "Leader-Companion" model that aims to leverage the leadership and geographic strengths of the three member companies to support the business development of its partners. At the same time, the alliance also named the "benchmarking area" for different regional markets around the world, and all three companies focused on their core regions, of which nissan motor companies in China, North America and Japan, Renault Group in Europe, Russia, South America and North Africa, and Mitsubishi Motors in Southeast Asia and Oceania.
In January this year, the alliance once again released the "Alliance 2030 Vision" for pure electric models and smart and connected mobility business, planning to achieve "carbon neutrality" in 2050. Under the new vision, the alliance plans to invest 23 billion euros in electrification over the next five years and launch 35 new pure electric models by 2030, of which 90% will be based on the five general purpose electric vehicle platforms, covering most major markets in the core region.
In the field of power batteries, the alliance plans to achieve the scale and affordability of batteries by working with common partners, planning to reduce battery costs by 50% by 2026; reducing battery costs by 65% by 2028; and by 2030, the alliance will have a total of 220GWh of pure electric vehicle battery production capacity at major production bases around the world.
Jean Dominic Sennad, Chairman of the Renault-Nissan-Mitsubishi Alliance, said: "The Renault-Nissan-Mitsubishi Alliance has established a mature strategic operational partnership in the automotive industry and has been working for the common good. The three companies have developed a common roadmap for 2030, a joint investment in future electro-driven and connected projects that no one can accomplish alone. ”
Renault's new conundrum
Under the clear goals of the alliance, Renault faces new problems.
On April 22, Renault released its 2022 Q1 financial report showing that due to chip shortages, geopolitics and other factors, Renault's global sales in the first quarter of this year were 550,000 vehicles, down 17.1% year-on-year, which is its lowest quarterly sales since the 2009 global financial crisis, of which Renault's sales in Russia fell by 34.3%.
According to public information, Russia is Renault's second largest market in the world, and its annual revenue in Russia is about 5 billion euros, accounting for about 12% of the revenue of its global automotive business. According to Citibank data, Renault is one of the auto companies most affected by the situation in Russia and Ukraine. Since the Russian-Ukrainian conflict, Renault's stock price has fallen by nearly a quarter.
Against this backdrop, Renault's revenue in the first quarter of this year was 9.75 billion euros, down 2.7% year-on-year. But it is worth mentioning that Renault's pure electric and hybrid vehicles increased by 13% in sales in the first quarter, accounting for 36% of total sales.
Image source: Per reporter Zhang Jian photographed (data map)
This also means that accelerating the transition to electrification has become one of the best solutions for Renault to break the game. In the "Renaulution" strategy, Renault has said that by 2025, 24 products will be launched, half of which are distributed in C-class and D-class segments, including at least 10 pure electric vehicles; the Renault brand will provide more than 65% of pure electric and electrified products in Europe; and by 2030, the proportion of Renault brand electric vehicles will reach 90%.
In January, Luca de Mayo said that by 2030, 100 percent of the Renault brand's sales in Europe would be electric. "Renault has advanced the time to stop selling new cars with internal combustion engines and will fully transform into an electric vehicle brand in Europe by 2030. After 2030, if there is insufficient charging infrastructure or excessive electricity prices, Renault May still sell some internal combustion engine models through the Dacia brand. Luca de Mayo said.