Nissan ‘Not Opposed’ To FCA-Renault Merger: Reports

According to a report published in the Japanese news paper Nikkei, the merger of Fiat Chrysler Automobiles and Renault would not be opposed by Japan’s Nissan Motors. The report claimed that was conveyed to the Renault management by Nissan officials at a meeting between the two that was held to discuss the future of their alliance.

The meeting between business leaders of Nissan, Renault and Mitsubishi Motors – the members of the three company alliance which is also the largest of its kind in the auto world in terms of manufacturing capacity, was however clouded by the merger proposal from FCA’s earlier this week with Renault.

Experts and analysts are unsure about how Nissan would fit into the new entity if a merger happens because it would result in the creation of the third largest auto company of the world. The merger would also increase the opprotunity for FCA of becoming a member of the three company alliance between Renault, Nissan and Mitsubishi.

Discussions about the proposed tie up and merger was held between Renault Chairman Jean-Dominique Senard and the leaders at Nissan, 43.4 per cent of which is owned by the French automaker.

The Nikkei report quoted an unnamed Nissan source who had attended the meeting as saying: “We are not opposed”. The report also claimed that the source also said “many details need to be worked out” before a final stance on the issue is arrived at by the Japanese automaker.

The members of the alliance had “an open and transparent discussion” on the merger proposal according to a statement issued by them. The aims of the merger is to address the challenges posed because of the cost escalation due to far-reaching technological and regulatory changes also including those that are targeted to developing a larger electric vehicle portfolio.

According to reports, the discussions had blindsided Nissan which had earlier turned down proposals from Renault about a possible merger of the two companies despite their 20-year alliance. There are concerns in Nissan that the relations between Nissan and Renault could be weakened because of the merger.

Nissan is already troubled with poor financial performance and a tension in its relations with Renault following the leading role played by the Japanese company and its current CEO Hiroto Saikawa in the ouster of its former chairman of Nissan and the alliance Carlos Ghosn

Tensions between Nissan and Renault have also cropped up because of the alleged imbalance in the relationship between the two companies in the alliance according to which just 15 per cent non voting stake is held in Renault by Nissan despite being a much larger company compared to the French auto maker.

The potential opportunities arising out of a possible Renault-FCA merger would be looked into by Nissan, Saikawa reportedly told the Japanese media before the meeting.

For Nissan to increase and expand its operations and enhance its margins, it is critical that it stabilizes its alliance with Renault, according to experts from the credit ratings agency Moody’s.

“It is unclear if the Nissan-Renault-Mitsubishi Motors alliance can advance their cooperation without resolving the cross-shareholding issue, which has been source of contention,” Moody’s said in the report which preceded a ratings cut by the agency for Nissan last week.

(Adapted from Europe.AutoNews.com)

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