The management of Nissan Motor Co Ltd (TYO: 7201), Renault SA (EPA: RNO), and Mitsubishi Corp (TYO: 8058) automobile manufacturers have revealed a survival plan for their firms, and it is not as anticipated. The firms decided they won’t be merging but rather would work together more on producing cars to reduce expenses and save their alliance.
The ravaging pandemic has hit both Nissan and Renault as they try to realign partnership interest after Carlos Ghosn’s arrest, the CEO of both firms. Ghosn has been at the forefront of both firms merging as Nissan has continued to resist that move.
Renault Chairman Jean-Dominique Senard said that both firms do not have to merge to be efficient. He revealed that a possible deal with Germany’s Daimler AG (ETR: DAI), owner of Mercedes-Benz AG could be reached and announcements would be made very soon.
Unfortunately, Renault and Nissan were among the weakest automobile manufacturers before the pandemic. They have also not been able to use their alliance to improve operations and invest in electric vehicles and other technologies.
Competitors like Peugeot SA (EPA: UG) and Fiat Chrysler Automobiles NV (BIT: FCA) are making progress with plans to share cost and design. However, Volkswagen and Toyota, which are among the biggest automobile makers, already operate as one.
Renault and Nissan Stocks
Both manufacturers have no doubt not enjoyed blossom seasons in recent times. Renault (RNO) stocks have been depressed thanks to Nissan’s tension. Renault also recorded its first loss in a decade last year, surging by around 20%.
As at the time of writing, Renault shares were down 1.71% and trading at 22.12 EUR. Renault is about getting aid from the French state of close to $5.5 billion. The government, however, wants the manufacturer to continue production in the country.
Nissan shares, however, have been on the rise surging 8.16% and trades at 449 JPY.
New Working Plan for Companies
With both firms concluding no merger is going to occur, their new alliance aims to make savings by sharing production in a leader-follower system. It works such that one firm leads for a vehicle type and geography, and the other supports regards designing and manufacturing.
Renault chairman believes it would help reduce cost and joint saving on future productions totaling $2.2 billion.
Renault, Nissan, and Mitsubishi had their grudges in corporate culture and opposing views on structures. The French automobile manufacturer owns 43%, while Nissan had 15% of the French carmakers with no right to vote.
Nissan does not want to merge. This is because the firm’s executive felt that Renault is not paying what it should for its engineering work in Japan.
Other updates from the transportation industry are here.