Nissan Contemplating Severing Alliance With Renault: Reports

According to news report published in Japan, there are concerns at the Japanese auto major Nissan that its relationship with the French auto giant Renault have turned dysfunctional following the arrest and ouster of Carlos Ghosn, the boss of both the companies, and as such executives at the Japanese company have contemplated the potential of breaking ties with its French partner.

The pros and cons of sustaining the alliance with Renault have been weighed by Nissan since last year – especially with respect to engineering and sharing technology, according to reports quoting information from sources with knowledge of the matter.

Te report however said that those evaluations by Nissan had taken place even before the escape from Japan of Ghosn and therefore those deliberations have not culminated into any concrete decisions.

Analysts are skeptical of how a separation from Renault would benefit Nissan and how feasible it would be since the French firm is also the major stakeholders of Nissan and since Renault has been emphasizing on repairing its relation with Nissan.

Despite this, the news shows the extent of fragility of the relationship between the two companies after the exit of Ghosn who was instrumental in forging the alliance and who was he linkman between the two companies. The Renault, Nissan and Mitsubishi alliance is the largest automotive alliance of the world in terms of production capacity. That was till Ghosn was arrested in November of 2018 in Japan over charges of financial misconduct which he has denied. Ghosn’s legal odyssey took a dramatic turn recently when he fled Japan for Lebanon and became the world’s most famous fugitive.

There has been financial trouble at both Nissan and Renault since the ouster of Ghosn and last year the stocks of the two companies were among the worst performers for 2019 among all global auto companies. The two companies have also reportedly drifted apart at a tough time for the global auto industry because of pressures of electrification and development of new technologies for self driving vehicles. Auto companies are also facing tougher emission norms in many markets of the world. This has led to multiple partnerships between auto companies and consolidation in the industry.

Evercore ISI analyst Arndt Ellinghorst wrote in a note Monday that the relations between the two companies are “broken and likely beyond the point of repair”.

There were no comments available in the media form Nissan on the reports of the separation with Renault. No comments from Renault were also available.

secret contingency plans to potentially split from Renault had been accelerated by Nissan executives because of the escape from Japan by Ghosn, the Financial Times had reported earlier.

(Adapted from JapanTimes.co.jp)

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