The future of the Renault-Nissan alliance is under threat thanks to moves by the French government and Yokohama’s increasing dissatisfaction with its lack of control.
In April, France’s economy minister Emmanuel Macron invoked a new law that allows it to take a 28 percent stake in Renault. Though at the moment it has only upped its ownership to just 19.7 percent, the intricacies of the rules effectively give Paris 30 percent voting rights and control in the boardroom, says Reuters.
Renault owns 43.3 percent of Nissan, giving it a controlling stake of the Japanese automaker, while CEO Carlos Ghosn oversees the operations of both companies. As a result, the new developments could see the French government determining Nissan’s overall business strategies, which the latter is not happy with.
Nissan currently owns just 15 percent of Renault, a lopsided partnership that formed when Nissan was on the verge of bankruptcy in 1999. The French cash infusion brought the company back from the brink but made Nissan subservient to the French automaker. The resulting Renault-Nissan alliance now sells one in ten cars around the world.
Today, with sales and engineering surpassing that of its French overseers, Nissan does not need its partner quite as much as it did in 1999. The company has two options, according to Nikkei Asian Review. It may execute an option in the Alliance’s contract to increase its share in Renault to 25 percent, which would cause Renault to lose its controlling voting rights in Nissan according to Japanese corporate law. Or, Nissan could issue new shares to dilute Renault’s stake to 40 percent, which under French law would give Nissan voting rights on its existing 15 percent in Renault.
Meanwhile, Macron’s move is believed to be spurred by pressures to create jobs in France. Negotiations on all three sides have been ongoing for six months. Renault’s board will decide how to react to the French government’s encroachment in a vote on December 11. The result could determine the future of one of the world’s largest automaking partnerships.
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