Yahoo News Nissan and Renault Merger Is Being Paused as Companies Restructure
Nissan and Renault have paused their merger plans to focus on cost cutting and production cutbacks as the coronavirus pandemic has taken a toll on sales and bottom lines.
The alliance between the automakers has seen a number of disagreements, but the companies are reportedly going to implement a "leader-follower" strategy in which each company leads the group in an assigned part of the world.
Renault could receive a loan from the French government, and Nissan is reportedly seeking a loan from private markets, to help sustain them through the crisis.
UPDATE 5/27/20: Nissan, Renault, and Mitsubishi shared more details on their revitalized alliance and how their collaboration will be reflected in their vehicles in the coming years. The alliance members confirmed that they would be using the method of one leading on the development of a technology while the others follow and adopt that platform or technology. Additionally, they said that each company would be responsible for a region whereby the respective automaker will focus on being the most competitive in that region and serve as a reference to the others; Nissan will be the reference for China and the U.S., Renault in Europe and South America, and Mitsubishi in Southeast Asia and Oceana. Additionally, in terms of new technology, Nissan will take the lead with electrification for larger vehicles and autonomy and Renault will work on Android-based connectivity and electrification for smaller vehicles.
Over two decades after Nissan and Renault came together to form an alliance, a merger of the two companies was on the horizon—that is, until the coronavirus pandemic put unexpected pressure on the auto industry. Now Nissan and Renault are pausing their plan to merge—which was pushed by former chairman Carlos Ghosn—and instead will be focusing on a new blueprint for a more manageable alliance, according to reports from Reuters and others.
Nissan and Renault, as well as their third, smaller alliance partner, Mitsubishi, are not alone in taking hits as a result of the pandemic, but their problems are undoubtedly severe. Bloomberg recently reported that Nissan is expected to cut 20,000 jobs as part of restructuring, along with a plan to cut $2.8 billion in costs. It is currently unclear if those cuts are related to the report on the alliance. The French finance minister warned that Renault may not survive without government aid, and the French government is considering a $5.4 billion loan to the automaker. Nissan is also seeking a $4.6 billion credit line, according to Reuters, to cushion the impact of the pandemic on its business. The problem is not theirs alone; IHS Markit has again revised its estimate of global automotive sales and is now forecasting a drop of 22 percent in 2020, compared with a 12 percent drop the group predicted in March.
For years, the relationship between Renault and Nissan has been rife with disagreement, including Nissan's claim that Renault didn't contribute enough and differing voting rights within the companies. The pandemic and its ensuing impacts on the industry have pushed the companies to reconsider their conflicts and seek to mend them to help the companies better survive the downturn. Nissan and Renault are reportedly planning to exchange ideas, with one taking the lead on the development of a technology or project, while the other follows. The follower will then take the newly developed technology and use it in their products.
More details of the alliance are expected to be announced this week, including official announcements of restructuring at both Nissan and Renault to come in the early hours of Wednesday, May 27. This could include cuts to tens of thousands of jobs, according to Reuters. The companies will give more information about the new philosophy that will propel the alliance going forward.
Nissan declined to comment on the report, and neither Renault nor Mitsubishi responded to C/D requests for comment.
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