Renault chairman Jean-Dominique Senard was in Tokyo for a board meeting of the three-way alliance among Renault, Nissan and smaller Japanese automaker Mitsubishi Motors Corp. "There was an open and transparent discussion on FCA's recent proposal to Groupe Renault. The meeting also discussed and positively concluded several current operational alliance matters," the Renault-Nissan-Mitsubishi alliance said in a statement, while declining to give details.
A quick resolution had not been expected. But it's clear the proposal from Fiat Chrysler Automobiles, which brought together the Italian and American manufacturers, complicates matters at a time when Nissan has plenty of problems.
"It's really important for Nissan to jockey for an equal position," to gain bargaining power among the companies, said Katsuya Takeuchi, senior analyst at Mitsubishi UFJ Morgan Stanley Securities. But that's extremely difficult when its finances are in deep trouble, weakening its position, and requiring full managerial attention as well as money, Takeuchi said.
Nissan's profit for the fiscal year ended in March totaled 319.1 billion yen ($2.9 billion), down from 746.9 billion yen the previous fiscal year, its worst showing since the global financial crisis a decade ago. Its profit for the fiscal year through March 2020 is expected to drop to 170 billion yen ($1.5 billion), due to restructuring, rising material costs and other expenses.
"If it had a trump card it could use, it would have used it already," Takeuchi said of Nissan's woes. Until recently, Nissan had been more profitable than Renault. But Renault, which came in to rescue Nissan from the brink of bankruptcy 20 years ago, remains the dominant partner, owning 43% of Nissan.
Ghosn had worked as the charismatic glue of sorts for the alliance. But now he awaits trial. Ghosn says he is innocent of the charges of falsifying retirement compensation reports and of diverting Nissan money for his investment losses and personal gain. His courtroom fight could take years.
Masayuki Kubota, chief strategist at Rakuten Securities, believes Fiat Chrysler, with its offerings like the Jeep that don't overlap with Nissan's lineup, and its strength in the U.S. market, has a lot to offer Nissan, perhaps even more than Renault.
Partnerships are increasingly critical in the intensely competitive globalizing auto industry, according to analysts, delivering cost cuts, market cooperation and auto parts-sharing. Going at it alone is precarious. But that doesn't mean companies, hailing from differing corporate and social cultures, can get along.
Falk Frey, a senior vice president and auto analyst at Moody's, said combining Fiat Chrysler and Renault made "strategic sense and could create a substantial amount of synergies," but warned of "significant execution risks" because of Renault's alliance with Nissan and Mitsubishi.
Renault's board will hold a meeting early next week to decide whether to agree to the proposal. Even if the decision is yes, consultations with unions, governments, antitrust authorities and other regulators are expected to take a year.
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