Renault-Nissan: how long will the alliance last?

Renault-Nissan: how long will the alliance last?

July 10, 2019 0 By autotimesnews

In 2019, the Renault-Nissan Alliance turned 20 years old, however, there were no celebrations. The company did not even congratulate its employees on their anniversary.

Employees and investors of both companies are now openly wondering whether the 21st anniversary will be celebrated or whether the companies will go their own way. The contrast between the scale with which the 10th anniversary of the union was celebrated and the present forgotten anniversary perfectly reflects the crisis state of the alliance.

Some shared responsibilities have been completely eliminated. Fired more than 10 employees who were responsible for communication between the leadership of Renault and Nissan. The activity of other areas, including production and quality control, has noticeably slowed down. Some market analysts say that “in mid-2019, the alliance remained only in the name.” This is an exaggeratedly serious assessment of the situation, but the reality shows how easily the alliance can disintegrate after 20 years of joint activity.

The steady decline in stock prices of both Renault and Nissan since the arrest of Carlos Ghosn, as investors note, indicates a decline in the alliance’s reputation and shows how dependent the Renault and Nissan alliance is on the charisma and skill of the alliance’s head.

The consequences of the collapse will affect the automotive industry – first, the two largest automakers have already suffered losses due to the arrest of the head of the alliance, Carlos Ghosn, and the subsequent decline in the value of shares. They were followed by investment shocks and the need to revise the strategy. This will inevitably bring about reforms in the Nissan and Renault relationship.

The long-term prospects of the alliance are still being evaluated negatively, since neither the head of Jean-Renault Dominique Senard, nor the executive director of Nissan Hiroto Saikawa, seem incapable of providing management that would reach the same height as under Carlos Ghosn.

Japanese analysts believe that “it would be better for the alliance to keep Ghosn in power, even if it cost an extra billion yen per year (the sum of the alleged embezzlement of the former head of Renault-Nissan).

In addition, shocks in the alliance did not happen at the most opportune moment. Global manufacturers are facing a crisis because they have to invest in expensive technologies, including autonomous technologies and electrification, work to reduce emissions, etc.

In June, Toyota announced plans to unite in an alliance with Subaru and Suzuki to work on electric vehicles. Soon Mazda should join them. If this happens, even more difficult times will come for the alliance.

Meanwhile, Nissan and Renault reject suspicions of the collapse of the alliance, assuring the public that the union’s activities are proceeding in the usual way. At the annual general meeting of Nissan in June, they sought to show that peace had come and are ready for restoration. However, the leadership of Nissan, as noted by sources close to the company, is convinced that after many years of Ghosn leadership, they are obliged to protect the company from French domination, and Nissan should strive for greater independence from Renault. In turn, the Renault leadership remains committed to the alliance and blames most of the problems of those who vote for the branch headed by Saikawa, who assured shareholders that any attempt by Renault to increase its influence on Nissan “will never happen.”