After six months of tortured negotiations and weeks of tactical leaking, Nissan and Renault in the end announced a deal in haste on Monday — one that was presented to the outside world as a renewal of marriage vows that would hold back the collapse of the carmakers’ 24-year-old alliance.
But behind the scenes, the consequences of the talks, according to senior figures on both sides, were more ambiguous: to some involved, they had set in train a potential parting of the ways over coming years.
The original intention may indeed have been to bring back functional co-operation from the abyss created by the 2018 departure of Carlos Ghosn. But the reality is a framework that makes it easier for the two to pursue separate lives.
“The number of misunderstandings that have taken place between these two companies, even in the past few months, is just unbelievable,” one of the senior figures said. “It’s a bit like a divorce.”
The main pillar of their new agreement involves equalising the stakeholding in each other, removing an imbalance in capital structure that had long destabilised the alliance. The deal would also include an agreement for Nissan to take a minority stake in Ampere, Renault’s electric vehicle spin-off.
Some of the talks to reach this point had been productive, some chaotic, and some, according to people familiar with the situation, cut short by shouting and walkouts. But without such a deal, said senior figures on both sides, the survival of the enterprise would be measured in months, not the possibility of years.
Now the hope is that the companies will focus instead on joint production projects, instead of on shareholder squabbles, at a time when car manufacturers globally are having to plough billions into bringing electric vehicles and other innovations to the market.
The depths of the relationship problems, said people involved, became more acutely obvious the longer the two sides negotiated ways to work together more closely in the future. Renault is sick of Nissan and Nissan is sick of Renault: there is nothing right now that seems capable of changing that, said one.
The tensions came to a head when Makoto Uchida, the chief executive of Nissan, opened a meeting between top executives and the company’s board in mid-January that he imagined would be a non-event. His subsequent blindsiding, said people involved, was instantaneous and spectacular.
Uchida had arrived that day with a tentative deal on the table, but instead of the strong backing he had expected, he was faced with a rebellion. A small group of non-executive directors expressed alarm that management was not negotiating aggressively enough with the French carmaker to protect Nissan’s interest and accused Uchida of ceding far too much to the Renault side.
One concern, according to people familiar with the discussions, was over the sharing of Nissan’s intellectual property rights with China’s Geely, which will partner with Renault and potentially Saudi Aramco in the French group’s carved-out legacy combustion engine business.
More critically, they needed to see that the rebalancing of the alliance’s shareholdings had been agreed on paper as a basic starting point for the deal. Uchida, they said, seemed overly eager to move ahead without that crucial guarantee that the French would honour the agreement.
Ultimately, the board members reluctantly agreed to let Uchida push ahead with the negotiations, after he had provided reassurances on the concerns raised.
“There was a go-ahead on the general direction of the negotiations, but there was nothing on paper and it was impossible to judge without seeing the actual details. There was no agreement yet,” said one person close to Nissan’s board.
“The non-executive directors were concerned over whether Nissan management was protecting the company’s interests. It was a strange situation where the non-executive directors had to tell the management that the deal had to be beneficial for Nissan,” the person added.
Another person close to the talks added: “On intellectual property, it’s as if you’d come to the end of 20 years of marriage but you’d never discussed who was going to take care of the children.”
Even for Renault, the outcome of the negotiations was not ideal. It would cut its 43 per cent stake in Japan’s Nissan to 15 per cent by transferring a 28.4 per cent stake to a French trust, where the voting rights would be neutralised for “most” decisions. Meanwhile, the Japanese group would hold on to its 15 per cent stake in Renault as part of the agreement and gain the voting rights it had long requested.
“It’s not exactly a glorious deal for Renault,” one senior banker in Paris said of the latest restructuring. The carmaker would relinquish what another called its “nuclear option” in Nissan — its ability to wield the full voting rights attached to its 43 per cent stake in the Japanese group, even if Renault had historically agreed with Nissan not to do so.
It also killed off any hope France, a 15 per cent shareholder in Renault, might have once harboured for a full merger between the companies.
Luca de Meo’s arrival at Renault as chief executive in 2020 was one of the triggers that helped pave the way for discussions on rebalancing, several people close to the talks said.
While the first task for the former head of Volkswagen’s Seat brand was to help steer Renault out of the red, including through cost cuts, its new chief was also keen to try to unblock some of the joint projects under discussion with Nissan — but was soon confronted with the state of near-paralysis in the alliance.
In January this year, after hopes for an initial breakthrough on a deal in November fell through, French president Emmanuel Macron gave his assurances to Japan’s government that the state would back a restructuring, people close to the talks said.
The negotiations turned toxic as minute details of the rejigging of the partnership began to leak from Paris to Tokyo, forcing France’s markets regulator, the AMF, to press Renault to make a statement on the state of its talks with Nissan in recent weeks, three people close to the situation said.
“It had become a very political and hugely covered story, and there were leaks every which way, details coming out all over the place. That was very irritating for the AMF,” one of the people said.
That forced the two companies to break cover about their agreement this week before their respective boards had signed off on it, with the consequent chaos of having to finalise a statement hours before the announcement was made on Monday.
The next stage, once the deal is formally approved by both boards, will be for shareholders to assess whether this is the start of a divorce or the first step towards true reconciliation, and at what cost this new arrangement has come in terms of concessions made by both sides. For Nissan investors particularly, there is the question of whether, in its efforts to secure the rebalancing of the alliance, too much has been given away in terms of its technology and IP.
“I think relatively little of what has been announced here,” said CLSA analyst Christopher Richter. “I do not think that, even now, there is a belief in senior Nissan management that the company belongs to its shareholders. So that is why they have, in this case, sacrificed shareholder interests for the sake of this narrow wish for independence from Renault.”