Nissan puts the brakes on Renault’s new merger effort

Nissan puts the brakes on Renault’s new merger effort

Nissan is opposing renewed efforts by alliance partner Renault to merge under a holding company because such a structure won’t help turn the Japanese carmaker around, according to a person with knowledge of the discussions.

Talks have been ongoing since Renault chairman Jean-Dominique Senard first made an informal proposal to Nissan chief executive Hiroto Saikawa in April.

Nissan rebuffed the idea then and has continued to oppose it, the source said. 

News of the talks comes as Nissan is set to report today its lowest annual operating profit in a decade, hurt by slumping US sales, ageing models, and a product cycle that’s out of sync.

The merger proposal came after the most tumultuous few months in the companies’ two-decade partnership, which was shaken by the shock arrest of the alliance’s chief architect and former chairman, Carlos Ghosn.

The French and Japanese manufacturers, along with third partner Mitsubishi Motors, make 10.8m cars each year — nearly double Ford Motors’ global deliveries.

The alliance — currently held together by a series of cross-shareholdings — would be second only to Germany’s Volkswagen, with Toyota a close third.

Nissan puts the brakes on Renault’s new merger effort

The combination would give Renault and Nissan heft as the industry is going through a radical shift toward electric and self-driving vehicles.

But a merger under a holding company won’t help solve Nissan’s current operational issues, such as high fixed-costs, unprofitable models and flawed Datsun and Infiniti brand strategies, the source said, adding that a new structure will cause delays in addressing these issues because of logistical and regulatory hurdles.

Combining the companies under a single entity won’t add benefits of scale because they already share purchasing and development costs.

Japanese broadcaster TBS reported Renault had made a formal offer to merge with Nissan under a holding company structure.

The Japanese government has also spurned efforts by Renault to engage in merger talks, according to the Financial Times.

No formal proposal has been made to Nissan, according to a source.

The Japanese carmaker hasn’t received a formal merger proposal from Renault, said Nissan executive Hitoshi Kawaguchi.

Although the French carmaker agreed in 2015 not to interfere in the Nissan board’s decision-making, the Japanese company’s financial weakness could give Renault an opening to push harder for a merger.

Bloomberg


More in this Section

Corporation tax revenues set to be bright spot in Covid-19 economic crisisCorporation tax revenues set to be bright spot in Covid-19 economic crisis

My job: The app that assists with social-distance socialisingMy job: The app that assists with social-distance socialising

EasyJet and Carnival to be knocked from Ftse-100 after Covid-19 hitsEasyJet and Carnival to be knocked from Ftse-100 after Covid-19 hits

Denis O'Brien's Digicel in Caribbean deal with French firm that controls EirDenis O'Brien's Digicel in Caribbean deal with French firm that controls Eir


Lifestyle

Kim Sheehan is an opera singer from Crosshaven, Co Cork, and is this year’s recipient of the Jane Anne Rothwell Award from Cork Midsummer Festival.A Question of Taste: Cork opera singer, Kim Sheehan

Developed in Ireland by Dublin-based indie gaming house Dreamfeel, If Found follows university graduate Kasio as she returns to Achill, Co Mayo, from the big city.'If Found': a story of belonging from the Irish videogame scene

B-Side the Leeside: Cork's Greatest Records - Giordaí Ua Laoghaire tells Don O’Mahony about the offbeat outfit who created some of the most innovative music on the Irish scene in the 1990sB-Side the Leeside: Nine Wassies from Bainne - A quirky slice of creativity

More time indoors is a chance to consider how we buy for our homes without being slaves to fleeting trends, writes Carol O’CallaghanMore time at home offers a chance to consider how we buy for our interiors

More From The Irish Examiner