Nissan, Renault map out fresh start for troubled car alliance

The companies’ mid-term plans will be disclosed around May

Shares of Nissan have declined about 40 per cent since November 2018, erasing Dh58.72bn in market value. AP
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The alliance between Nissan, Renault and Mitsubishi agreed to coordinate strategies and name leaders for regions and technologies in a move clearly designed to reverse managerial paralysis and a rapid deterioration in profitability over the past year.

The companies’ mid-term plans will be disclosed around May, they said in a statement following a meeting in Japan, adding that the alliance is “essential” for growth.

Nissan will be the so-called reference for China, Renault for Europe and Mitsubishi for Southeast Asia, while one company will lead development for each key technology, they said.

“We are not performing as expected” in the alliance, Nissan chief executive Makoto Uchida told reporters.

The admission of shortcomings coincides with an industry slump and jitters about the impact of a viral epidemic in China.

The Franco-Japanese partnership, which came close to collapse last year following the arrest of former leader Carlos Ghosn, also had to digest some sobering news this week when confirmation came that their sharp drop in combined unit sales last year had pushed them behind industry leaders Volkswagen and Toyota.

Combined global deliveries for the alliance fell 5.6 per cent to 10.2 million vehicles in 2019, below Toyota’s 10.7 million vehicle sales for the first time since 2016 and the 10.9 million sold last year by Volkswagen. Toyota’s sales climbed 1.4 per cent and Volkswagen’s gained 1.3 per cent.

“We all share the sense of urgency,” Jean-Dominique Senard, Renault’s chairman, told reporters.

Mr Senard has made patching up differences within the alliance a priority, and has said new governance and management at Nissan have improved their working relationship.

The ouster of Mr Ghosn, the former chairman of all three automakers, revealed long-simmering tension stoked by Renault and Nissan’s lopsided cross-shareholdings.

Yet Nissan has shown few signs of willingness to move on, vowing to pursue legal action against its former boss who kept the partnership together. As the largest and most profitable member of the alliance, Nissan risks distracting from efforts to revitalise its troubled operation should its management spend their energy settling scores with its former leader.

“Nissan already has a lot of problems with its core business and the focus on Mr Ghosn is a big distraction for management,” said Christopher Richter, CLSA’s deputy head of Japan research.

Shares of Nissan have declined about 40 per cent since Mr Ghosn’s arrest in November 2018, erasing $16 billion (Dh58.72bn) in market value, while Renault has declined about 45 per cent or $9.4bn.