Renault and Nissan Rebuilding Alliance

On Monday, Renault and Nissan officially revitalized their relationship which had been strained, leading to the downfall of former CEO, Carlos Ghosn. Both automakers approved equalizing their stake in each other to 15%, creating a more balanced alliance that also includes Mitsubishi Motors. The previous unequal shareholdings were seen as a source of tension. Previously, Renault held 43.4% of Nissan, while Nissan held 15% of Renault. Renault board Chairman Jean Dominique Senard declared the move to be the start of a "new era" at a press conference in London.

Nissan plans to invest up to 15% in Renault's European electric vehicle and software subsidiary, Ampere, with Mitsubishi also considering an investment. The automakers announced their collaboration in global markets, including Europe, Latin America, and India, as the highly competitive automotive industry is undergoing a significant shift towards environmentally friendly and electric vehicles.

The long-anticipated changes in the carmaker alliance were confirmed last week. The companies agreed to transfer a 28.4% stake to a French trust. Renault, whose largest shareholder is the French government, and Nissan agreed to a deliberate sale of the stake without a set deadline. Nissan CEO Makoto Uchida aims to bring the alliance to the next level of evolution in response to the changing industry landscape, particularly the shift towards electric vehicles. Sharing parts, production, and technology through partnerships can be a cost-saving strategy for automakers during this time of transformation in the auto industry.

The difficulty in ending an alliance arises from the close connection between the companies' operations, production, and products. However, partnerships can be challenged by contrasting corporate cultures, particularly when it involves a merger between the Western and Eastern hemisphere. The Renault-Nissan alliance, established in 1999, faced a crisis when Carlos Ghosn, who was sent by Renault to save Nissan from bankruptcy, was arrested in 2018 on charges of financial misconduct. Ghosn claims his innocence and fled to Lebanon, where he now resides, as the country has no extradition treaty with Japan. Renault and Nissan have since distanced themselves from the Ghosn scandal.

In an interview, Senard emphasized that Renault is decidedly in the post-Ghosn era. "That is in the past. I mean, nobody in Renault today is talking about that subject," he said, without mentioning Ghosn's name. "They're all concentrated, honestly, on the future, on what we're doing."

With its Ampere project, Renault is scrambling to beef up its electric car lineup like other automakers, adding to an increasingly competitive field long dominated by Tesla. Senard said he's confident about the French automaker's chances. "You look at the new cars that are coming out from the Renault plants today. They're just beautiful," he said. "I mean, they have nothing to be jealous about when they look at Tesla and these other guys."

The Renault chairman admitted that Chinese EV brands exporting to Europe have an edge in terms of cost advantage, but stated that this presents a challenge for the French automaker and a motivation to compete. He stated that Renault has taken the risk and aims to win it.

During the press conference, Renault CEO Luca de Meo and other executives emphasized that the alliance will see growth in collaboration, cost savings, product offerings and sales, and that the relationship between the companies will be focused on the future and become more "normal". The Renault chairman acknowledged past issues, but expressed hope that they will be resolved. He stated that the past frustrations are now behind them.

Renault exited the Russian market in the wake of the Ukrainian invasion and sold its majority stake in the Russian car company, Avtovaz, and its Moscow factory, for a nominal price of one ruble.