On 15th February the Wall Street Journal reported that Japan’s government had intervened in talks at Renault-Nissan about the possibility of merging the two groups. This raises questions about Tokyo’s role in what several analysts consider to be an attempt to thwart Renault’s plans.
Renault-Nissan: an industrial alliance but still a power struggle
After being arrested on 19th November 2018, Carlos Ghosn insisted on 30th January 2019 that he was a victim of a “plot and treason” by Nissan. Two months prior to his arrest, he had indeed discussed the idea of deepening ties between Renault, Nissan and Mitsubishi Motors with Nissan’s CEO Hiroto Saikawa. The former chairman had revealed that he would make the merger his priority if he were given a new term. He says Nissan was actually afraid of being absorbed into Renault. Although the planned holding company would have enabled each entity to continue operating independently, it would nonetheless have held all their shares. And while Nissan still accounts for over half of the group’s earnings, its revenues fell by 5% year-on-year in the first half of 2018 while Renault’s grew by 1.4%. The same goes for vehicle sales, which increased by 9.8% at Renault but shrank by 1.8% at Nissan. If a merger had gone ahead, it would no doubt have been to Nissan’s disadvantage.
Japan keen to curb the French group’s appetite within the alliance
Nissan was in serious difficulty at the time the Renault-Nissan alliance was first created. Renault bought a 43% stake in Nissan, which in turn acquired 15% of Renault’s shares. The lopsided balance was fiercely disputed in Japan, especially as the French state owned 15.01% of Renault. Then, in April 2015, the government of François Hollande, including his finance minister Emmanuel Macron, unilaterally increased its share of the group by purchasing an additional 4.7% stake. At the time, Carlos Ghosn had travelled to Japan immediately to hold a crisis meeting. The suspicious Japanese took a very dim view of the French state’s tactics aimed at increasing its influence within the alliance. In France, Emmanuel Macron is said to have asked Carlos Ghosn to push for the two entities to merge and for Renault to take control of Nissan.
A year later, in a show of good faith, Carlos Ghosn appointed Hiroto Saikawa as Nissan’s CEO, having previously planned to fill the role with an American. Mitsubishi joined the alliance in 2016, shifting the centre of gravity closer to Japan, but the shareholder structure was still very much biased against the Japanese (under the Florange Act passed by François Hollande, each state-owned share in Renault gives it double voting rights). With Nissan losing prominence within the alliance and the French state increasing its influence, Japan has been keen to put things on a more even keel.
Paris Carlos Ghosn’s emprisonment sends Paris a message
Hiroto Saikawa announced during a press conference in early 2018 that talks were underway to change the alliance’s shareholder structure. In April that year he told Japanese newspaper Nikkei that: “The point of the alliance is to keep its members independent and maximise the growth of each […]”. He had then pointed out that the Japanese dismissed the idea of merging the two entities.
According to the Wall Street Journal, Nissan’s top executives then contacted the METI (Japan’s Ministry of Economy, Trade and Industry) to fend off what they considered to be a merger proposal led by Carlos Ghosn. Mr Ghosn ended up being accused of financial misconduct and arrested.
That same evening, Hiroto Saikawa appeared on television referring to the alleged behaviour as “the dark side of Ghosn’s long reign” and lamenting that “so much power was concentrated in the hands of one individual”. Even more so in the hands of one group… Similarly, following a meeting between French President Emmanuel Macron and Japanese Prime Minister Shinzo Abe at the 2018 G20 summit, Abe had said it was crucial to maintain a “stable relationship” within the alliance.
A French delegation travelled to Japan mid-January of this year. According to press agency Kyodo, the French party reportedly announced that it was keen for Renault and Nissan to merge. This was then denied by Bruno Le Maire, France’s finance minister. He said there were currently no plans to either merge the two groups or reshuffle Renault-Nissan’s shareholder structure.
So the status quo is maintained. But the stand-off, meanwhile, is well and truly underway.