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.

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.


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