Nissan Strengthens Partnership with Renault

After a bid by the French government to increase its say in the functioning of automotive manufacturer, Renault by acquiring more voting rights and increasing its stake to 19.7per cent, there were fears that the Renault-Nissan alliance would be in crisis. However, now Nissan has issued a statement that it has reached an understanding with the French government and the alliance is as strong as ever.

According to a statement issued by Hiroto Saikawa, Vice-Chairman of the board, Chief Competitive Officer of Nissan, an agreement has been reached between Nissan, Renault and the French government securing the future of the Nissan-Renault alliance. The French government has agreed to control its interference in the operations of the carmakers while Nissan has agreed to refrain from increasing its influence in on Renault.

Saikawa concluded: “Nissan’s commitment to a strong Alliance never wavered and we firmly believe the new agreement is in the best interests of our company. This marks the next step in the evolution of our company and the Alliance”.

Currently, Renault has a 43.4 stake in Nissan and if the French government had acquired more than 30 per cent of the voting rights in Renault as planned, it would have been the biggest shareholder in the company and would have had a crucial vote in determining the company’s strategy and operations. Charles Ghosn, the Chairman and CEO of the Renault-Nissan alliance had strongly opposed this move by the French government to get greater control.

In the truce that has been reached between the three parties, the French government has agreed to cap its voting rights in Renault at 17.9%, except in the event of a major decision as in the case of a takeover or Renault’s operations within France. Renault has agreed not to interfere in any aspect of Nissan’s governance while Nissan has promised not to increase its stake in Renault from the 15 per cent it currently holds.

The two companies have been longstanding partners from 1999 when they formed the Renault-Nissan Alliance in 1999, with Renault taking a 43.4% stake in Nissan, and Nissan taking a 15% share in Renault.

Commenting on the agreement, Carlos Ghosn said that the agreement will help the two partners to focus on further sustainable growth and success. While there are still a few short term problems that need to be addressed, in the long view, the agreement will allow business to resume as usual.

In the vent that this agreement is breached by either Renault or the French government, Nissan will have the right to increase its stake in Renault to 25%.

One in 10 cars sold around the world are produced by the Nissan Renault alliance accounts, though in recent years Nissan has been growing at a faster pace than Renault.