Reanult-Nissan: behind the scenes of the long negotiations to fix their alliance
To the end, Nissan doubted the good faith of the French. For months, the Japanese “partner” pursued Renault, deceiving the hope of a quick result of the talks initiated by Luca di Meo, managing director of Renault, and supported by its president Jean- Dominique Senard for a new Alliance.
At the end of the summer, the latter was still betting on a deal in the fall. In particular, Luca Di Meo felt that his plan to reorganize Renault into two entities, one thermal and one hybrid (Horse), the other electrical (Ampere), should enable the Alliance to start over. He then hoped for a result of the negotiations at the end of 2022. But he was too optimistic and, disappointed, left the steering wheel of the negotiations to Jean-Dominique Sénard. At the beginning of 2023, after many round trips by the two leaders to Yokohama, the President of the French Republic himself entered the dance. On January 9, Emmanuel Macron welcomed then Japanese Prime Minister Fumio Kishida at the Élysée, officially preparing for his presidency of the G7 this year; as an aside, according to our information, he is working to reassure his host about Renault’s intentions. These assurances were duplicated and written in a letter from Bruno Le Maire to his counterpart at the Japanese Ministry of Industry, METI, in terms without the slightest ambiguity: yes to the voting rights associated with Renault shares held by Nissan; yes to rebalancing the holdings of the two groups, by 15% each.
However, according to a person close to the negotiations, despite all the extraordinary signs of reconciliation, the agreement between the two manufacturers was still not secure a week later, on January 16, when it was presented to external manufacturer administrator. It was necessary to argue bitterly, until around midnight, to take back the green light from them for “Alliance 2.0”. And the abscess burst.
Minister Macron’s entryism is not much appreciated by the Japanese
Why such pusillanimity? “Nissan is more demanding of rebalancing than Renault,” said Christopher Richter, analyst of the Japanese automotive sector for CLSA. The French manufacturer is, so to speak, executed. Not only will Renault give up voting rights to the 15% stake Nissan holds in its capital, but it will also significantly reduce its own stake in the Japanese capital from 43 to 15% by “sterilizing” the remaining 28% in a fund jointly managed by the two manufacturers, with the aim of their future sale on terms suitable to the two “partners” (at a good price for Renault, to a buyer acceptable to Nissan). In exchange for these concessions, Renault will get a financial stake – up to 15% – in Amperethe new entity dedicated to electric vehicles designed by Luca di Meo, and the green light for Horse, another entity, this one focused on thermal and hybrid vehicles, especially the Chinese manufacturer Geely. And, best of all, the agreement finally puts the two manufacturers on roughly equal footing. “Almost”, because a priori, 43% of Renault always leaves the possibility of suddenly separating from Nissan by selling its shares on the market – what the French call the “nuclear option”.
So why did Nissan hesitate? “This is not the first time that a Japanese company has shown itself to be stubborn… In the past, relations between Volkswagen and Suzuki or between Honda and BMW have not been easy”, recalled Christopher Richter. This time, the lack of trust has many sources. The arrest of Carlos Ghosn, then the head-to-tail of the two builders before Japanese justice, clearly left their mark. The attempted merger between Renault and FCA in early 2019 led by Jean-Dominique Sénard without giving Nissan, according to the latter, enough time for reflection, did not help matters. But the real original sin on the French side came in 2015 from a young Finance Minister named Emmanuel Macron when he applied, straightforwardly, the Florange law to Renault and doubled State-shareholder voting rights.
A real dare for Nissan. First because it indicated the entry of the French government into the affairs of its unthinkable reference shareholder in the industrial capitalism of the Archipelago: sometimes the Japanese State draws a broad line, it does so in conjunction with its main groups and uninviting self, brutal, in their rule. Then, this coup showed the Japanese the limits of Carlos Ghosn’s power to oppose the desire to merge Renault and Nissan in Bercy, which triggered a real paranoia in Tokyo, which still lasts. “You have to understand that Masakazu Toyoda was on the front line when Emmanuel Macron applied the law of Florange. We will not do the same thing to him twice” explains, understanding, a connoisseur (French) of the two groups. Early January. the signs of support from the Élysée and Bercy, in the final hours of the negotiations, were therefore decisive.
The fear of being under Renault’s control is slipping away
On a formal level, the lack of trust shown by Nissan shows more the blocking power of some hierarchs of the manufacturer, internally, than the general feeling of its management. French and Japanese actors agree, for example, on Makoto Uchida’s spirit of compromise. With overseas experience and a pragmatic attitude, Nissan’s general manager has long accepted the “deal” offered by Renault. This allows him to leave a historical trace of his time at the head of the manufacturer. Most Nissan directors went along with the proposed plan. Above all, along the way, everyone understood that Renault is a very convenient shareholder. The hope of freedom from French tutelage gave way to the agony of falling under the yoke of a more demanding shareholder: an industrialist like him, the French could easily “get into the wheel” of the Japanese and become complacent . Nissan can hardly find such listening quality. And what will it do if, thanks to a sale of Nissan shares by Renault, its reference shareholder is suddenly a foreign activist fund, American or… Chinese?
In other words, Nissan had no reason to reject the French proposal. But such a decision would have to follow the standard process of large Japanese groups, where all parts of the company are consulted, from the factory floor to the president’s office. A cultural characteristic that, in his time, Carlos Ghosn, who toured factories around the world before launching Nissan’s spectacular recovery, was well aware of. According to some sources, it is mainly the external administrator Masakazu Toyoda, from the Ministry of Industry, “guardian of the Temple” and of national interests, who has been “stuck” for months.
How will Nissan view its French partner now that they have a relationship “between equals”? In the Alliance, Renault has always been the undoubted force of proposals, while Nissan is content with the place of death, letting itself be carried away, without proposing anything. “Now that the fear of being under Renault’s control is fading, maybe they’ll work better together,” speculated Christopher Richter, without actually believing it. This group must be taken reloading projects. The two manufacturers set their sights on India, a large land for them, while the rest of the world is already divided into immobile zones: in Renault Europe, South America, in Nissan Japan, China and the United States. “India is the territory where they are not in competition”, observes Christopher Richter.
