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Nissan, Renault to Tighten Alliance Without Merger
Carlos Ghosn says one day a merger might make sense, but not today
HANAI/REUTERS
By
ERIC PFANNER
Dec. 15, 2015 1:40 a.m. ET
YOKOHAMA, Japan—After settling a dispute with the French government over the balance of power in their car-making partnership, Renault SA and Nissan Motor Co. will step up integration without moving toward a full merger at this point, alliance chief Carlos Ghosn said Tuesday.
Mr. Ghosn, who also serves as chief executive of the French and Japanese car makers, said a merger might “one day make a lot of sense, but certainly not today.”
“I don’t think we’re ready,” he told reporters at Nissan headquarters here. “Yeah, I know the markets want a merger. It’s not only about the market. It’s about the sustainability of what we’re doing.”
Shares of both companies have fallen since Friday when the companies announced the resolution of a tense standoff with the French government under which they revised the terms of an agreement governing the Renault-Nissan Alliance. The declines highlight investor concerns that the revision doesn’t go far enough to address shifts in the relative strength of Renault and Nissan since they joined forces in 1999.
At that time, the two companies were comparably sized in terms of vehicle sales, though Renault rescued Nissan from near collapse. Since then, Nissan has grown much more rapidly and now sells about twice as many vehicles as Renault.
Under the compromise, Nissan was given the right to increase its stake in Renault -- currently a 15% nonvoting interest -- if the Japanese partner decides that the French government, a Renault shareholder, intervenes too much in its affairs. The dispute arose when Paris increased its stake in Renault, which owns a 43% voting interest in Nissan, to ensure enforcement of a new French law that grants double voting rights to long-term shareholders.
Instead of moving toward a merger, Renault and Nissan will unveil new operational synergies next year, following up on previous efforts to integrate purchasing, manufacturing, engineering and other functions, Mr. Ghosn said.
“Everything not related to the specificity of the brands is going to be converging,” he said.
While the resolution of the dispute with Paris lifts the immediate cloud hovering over the alliance, it still leaves questions over the future of the structure—not least who will run it once Mr. Ghosn retires. Some analysts say it is difficult to envision the alliance holding together once Mr. Ghosn relaxes his grip.
Echoing previous remarks, Mr. Ghosn said Tuesday that he thought the two companies would be best served with separate CEOs, reporting to the Renault-Nissan Alliance board, when he departs. He said it was unlikely that the two companies would be able to find a single individual who would have the same “legitimacy” to both partners, and he said he would prefer that the next Nissan chief be Japanese.
“I know how tough this job is because I’m doing it,” he said.
Write to Eric Pfanner at eric.pfanner@wsj.com
Carlos Ghosn says one day a merger might make sense, but not today
By
ERIC PFANNER
Dec. 15, 2015 1:40 a.m. ET
YOKOHAMA, Japan—After settling a dispute with the French government over the balance of power in their car-making partnership, Renault SA and Nissan Motor Co. will step up integration without moving toward a full merger at this point, alliance chief Carlos Ghosn said Tuesday.
Mr. Ghosn, who also serves as chief executive of the French and Japanese car makers, said a merger might “one day make a lot of sense, but certainly not today.”
“I don’t think we’re ready,” he told reporters at Nissan headquarters here. “Yeah, I know the markets want a merger. It’s not only about the market. It’s about the sustainability of what we’re doing.”
Shares of both companies have fallen since Friday when the companies announced the resolution of a tense standoff with the French government under which they revised the terms of an agreement governing the Renault-Nissan Alliance. The declines highlight investor concerns that the revision doesn’t go far enough to address shifts in the relative strength of Renault and Nissan since they joined forces in 1999.
At that time, the two companies were comparably sized in terms of vehicle sales, though Renault rescued Nissan from near collapse. Since then, Nissan has grown much more rapidly and now sells about twice as many vehicles as Renault.
Under the compromise, Nissan was given the right to increase its stake in Renault -- currently a 15% nonvoting interest -- if the Japanese partner decides that the French government, a Renault shareholder, intervenes too much in its affairs. The dispute arose when Paris increased its stake in Renault, which owns a 43% voting interest in Nissan, to ensure enforcement of a new French law that grants double voting rights to long-term shareholders.
Instead of moving toward a merger, Renault and Nissan will unveil new operational synergies next year, following up on previous efforts to integrate purchasing, manufacturing, engineering and other functions, Mr. Ghosn said.
“Everything not related to the specificity of the brands is going to be converging,” he said.
While the resolution of the dispute with Paris lifts the immediate cloud hovering over the alliance, it still leaves questions over the future of the structure—not least who will run it once Mr. Ghosn retires. Some analysts say it is difficult to envision the alliance holding together once Mr. Ghosn relaxes his grip.
Echoing previous remarks, Mr. Ghosn said Tuesday that he thought the two companies would be best served with separate CEOs, reporting to the Renault-Nissan Alliance board, when he departs. He said it was unlikely that the two companies would be able to find a single individual who would have the same “legitimacy” to both partners, and he said he would prefer that the next Nissan chief be Japanese.
“I know how tough this job is because I’m doing it,” he said.
Write to Eric Pfanner at eric.pfanner@wsj.com
