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on an equal footing! Renault Nissan restructuring agreement finalised

2024-03-03 Update From: AutoBeta autobeta NAV: AutoBeta > News >

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AutoBeta(AutoBeta.net)07/27 Report--

After months of negotiations, Nissan Renault's restructuring of the alliance has finally been finalized.

On July 26, Nissan China announced on its website that Renault and Nissan have completed a final agreement on a binding framework agreement signed in February 2023, in which they will hold 15% of each other's shares. This also means that the Renault-Nissan-Mitsubishi alliance restructuring agreement was formally confirmed. Under the agreement, Renault's stake in Nissan will be reduced to 15 per cent from the current 43.4 per cent, the same as Nissan's stake in Renault, and both parties are free to exercise the voting rights associated with a 15 per cent direct stake. The final deal also means that Renault and Nissan will be on a more equal footing to some extent.

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It is understood that Renault transferred its 28.4% stake in Nissan to a French trust, and Nissan has the right of priority. In addition, Nissan has pledged to invest up to 600m in Ampere, a new electric vehicle company formed by Renault, and has sent directors to the company to impose restrictions on the handling of intellectual property rights such as electric vehicles and auxiliary driving technology.

On the finalization of the restructuring agreement, both Renault and Nissan said: "the revised agreement is still subject to regulatory approval and is expected to be completed in the fourth quarter of 2023." In addition, the agreement will not only co-operate on electric vehicles and software development in Europe, but also establish cooperation systems in growing markets such as India and Central and South America, where there is strong demand for fuel vehicles, the two sides said. Mitsubishi Motors, another company in the alliance, said this week that it would decide whether to invest in Ampere by the end of 2023 at the earliest. Renault postponed the initial public offering of its electric vehicle division in June, according to feedback from investors.

In fact, as early as early February this year, Renault and Nissan announced that they had formally signed an alliance restructuring framework agreement, in which the two companies would continue the alliance on the basis of the agreement to accelerate the electrification transformation, but it took longer than expected to finalize the agreement, and both sides spent weeks trying to solve the crux of intellectual property and Ampere investment issues. In February 2022, Renault announced the spin-off of the electric vehicle and internal combustion engine business into separate divisions. The fuel vehicle business after the spin-off will be named Horse and will be headquartered outside France, while the electric vehicle business will be named Ampere and headquartered in France.

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Renault, Nissan and Mitsubishi are established car companies in France and Japan respectively, and the tripartite alliance has a history of many years. As early as 1999, Renault and Nissan formed an alliance. In May of the same year, Renault bought a 36.8 per cent stake in Nissan for $5.4 billion and won the right to increase its stake to 44.4 per cent five years later. In 2000, Renault put forward a "Nissan recovery plan" and led Nissan to turn losses into profits. In 2003, Nissan and Dongfeng established Dongfeng Motor Co., Ltd. to officially enter the Chinese market, and Nissan acquired a 15% stake in Renault in the same year. At this point, Renault has a 44.4% stake with voting rights, while Nissan owns only 15% of Renault. No voting rights. Due to the unequal equity relationship between the two sides, Renault can affect the relevant operations of Nissan, while Nissan's impact on Renault is almost negligible, resulting in cracks in the relationship between the two sides. Nissan began to object to the unequal investment relationship between the two sides.

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In 2016, Nissan acquired a 34% stake in Mitsubishi Motors, and Mitsubishi Group became a member of the Renault-Nissan alliance, which formed the Renault-Nissan-Mitsubishi alliance. Among the three relationships, Renault is the majority shareholder of Nissan, Nissan is the majority shareholder of Mitsubishi, and Nissan CEO Ghosn is the soul of the alliance. Under his leadership, the Renault-Nissan-Mitsubishi alliance became the world's largest manufacturer in 2017 with a total sales of 10.61 million vehicles, but in less than two years, the relationship between the three also appeared cracks.

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The trilateral alliance began to deteriorate when Nissan CEO Ghosn was arrested on suspicion of financial irregularities in November 2018. Before Mr Ghosn's accident, Renault-Nissan-Mitsubishi alliance sales of 5.538 million vehicles in the first half of 2018, the world's largest carmaker, fell 5.6 per cent to 10.1552 million in 2019 after Mr Ghosn's arrest. In May 2020, the Renault-Nissan-Mitsubishi Alliance reorganized its global layout, each with its own important markets of concern, with Nissan focusing on China, North America and Japan, Renault Group focusing on Europe, Russia, South America and North Africa, and Mitsubishi focusing on Southeast Asia and Oceania.

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As for the restructuring agreement between Renault and Nissan, industry insiders believe that the restructuring agreement between the two sides is more like an inevitable choice under the painful transformation of the enterprise. As the global transformation of new energy becomes more and more intense, both Renault and Nissan are under great pressure. In this context, Renault and Nissan must make fundamental innovations if they want to survive. With the finalization of the restructuring agreement, Nissan may have a greater say in operational independence, while Renault is willing to make concessions on shareholding, in addition to easing the long-strained investment relationship between the two sides, what is more important is that the process of car electrification in Europe is accelerated. In addition, Renault and Nissan will have more freedom to work on other projects. Renault has already worked with Geely on fuel car projects and with Qualcomm on semiconductors, while Nissan is turning to electric cars and reducing costs and efficiency.

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