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Nissan and Renault Lock Horns as Relationship Sours Further Nissan and Renault Lock Horns as Relationship Sours Further
(about 5 hours later)
TOKYO — The cracks in the world’s largest auto alliance grew wider on Monday, as Nissan Motor condemned as “most regrettable” a decision by its French partner, Renault, to withdraw support for the Japanese automaker’s efforts to overhaul its governance.TOKYO — The cracks in the world’s largest auto alliance grew wider on Monday, as Nissan Motor condemned as “most regrettable” a decision by its French partner, Renault, to withdraw support for the Japanese automaker’s efforts to overhaul its governance.
The message marks a new low in the relationship, and reflects the fallout from last week’s collapse of a proposed mega-merger between Renault and Fiat Chrysler that would have created one of the world’s biggest carmakers. Nissan’s hesitance to agree to the deal was a contributing factor in the collapse. The message signals a new low in the relationship, and reflects the fallout from the collapse last week of a proposed merger between Renault and Fiat Chrysler that would have created one of the world’s biggest carmakers. Nissan’s hesitance to agree to the deal was a contributing factor in the breakdown.
In a statement on Monday, Nissan’s chief executive, Hiroto Saikawa, said he had received a letter from Renault saying that the French company intended to abstain from a vote on implementing the governance overhaul. The measures were intended to address problems with the company’s management that came to light after the November arrest of Carlos Ghosn, the former chairman of the two companies and the overall alliance, which also includes Mitsubishi Motors. In a statement on Monday, Nissan’s chief executive, Hiroto Saikawa, said he had received a letter from Renault saying that the French company intended to abstain from a shareholder vote to adopt the governance overhaul. The measures were intended to address problems with the company’s management that came to light after the November arrest of Carlos Ghosn, the former chairman of the two companies and the overall alliance.
“Nissan finds Renault’s new stance on this matter most regrettable, as such a stance runs counter to the company’s efforts to improve its corporate governance,” Mr. Saikawa said in the statement.“Nissan finds Renault’s new stance on this matter most regrettable, as such a stance runs counter to the company’s efforts to improve its corporate governance,” Mr. Saikawa said in the statement.
Concern over the growing rift prompted two top government officials of France and Japan to issue a statement urging both automakers to work together. Bruno Le Maire, the French economy minister, and his Japanese counterpart, Hiroshige Seko, met on Monday and said that they “reaffirmed the strong support for the alliance” by both governments, and “encouraged both companies’ sincere discussion to enhance competitiveness of the alliance and their shared wish to maintain and reinforce this winning cooperation.” Adoption requires approval of two-thirds of Nissan’s shareholders; Renault holds a 43.4 percent stake, so the proposal cannot pass without its support.
The proposal was drawn up by an independent panel in March and was slated to be approved by Nissan’s shareholders during the company’s annual meeting later this month. Renault owns a 43 percent stake in Nissan, and the package of reforms cannot pass without its support. Nissan owns a 15 percent nonvoting stake in Renault. Concern over the growing rift prompted two top government officials of France and Japan to issue a statement on Monday urging both automakers to work together.
The proposed changes would have created independent committees to manage nomination of the company’s directors and executive compensation, bringing the company’s governance structure into line with standard practice for major international companies in Europe and the United States. Bruno Le Maire, the French economy minister, and his Japanese counterpart, Hiroshige Seko, met in Japan and later said they “reaffirmed the strong support for the alliance” by both governments, and “encouraged both companies’ sincere discussion to enhance competitiveness of the alliance and their shared wish to maintain and reinforce this winning cooperation.”
The letter, sent to Mr. Saikawa by Renault’s chief executive, Jean-Dominique Senard, said that Nissan had not fully considered Renault’s views on the overhaul, according to news reports. The proposal was drawn up by an independent panel in March and was scheduled to be approved by Nissan’s shareholders during the company’s annual meeting later this month.
In his statement, Mr. Saikawa rejected that view, saying that the “transition was discussed thoroughly by Nissan’s board and approved by all board members, including Renault’s own nominees.” Nissan’s board includes Mr. Senard and two former Renault executives. The plan called for creating independent committees to manage nomination of the company’s directors and executive compensation, bringing the company’s governance structure into line with standard practice for major international companies in Europe and the United States.
Mr. Ghosn’s arrest threw relations between Nissan and Renault into disarray. The two companies have made efforts to fix their failing relationship, which is critical to their survival in an increasingly competitive auto industry. The letter, sent to Mr. Saikawa by Renault’s chief executive, Jean-Dominique Senard, said Nissan had not fully considered Renault’s views on the changes, according to news reports.
Peter Wells, a professor at Cardiff Business School in Britain, said that Nissan and Renault need each other, despite their recent troubles. Mr. Saikawa rejected that view, saying that the “transition was discussed thoroughly by Nissan’s board and approved by all board members, including Renault’s own nominees.” Nissan’s board includes Mr. Senard and two former Renault executives.
Relations between Nissan and Renault were thrown into disarray after the arrest of Mr. Ghosn on charges on charges of financial misconduct. Mr. Ghosn was the architect of the alliance, which has lasted 20 years, and the two companies have made efforts to fix their failing relationship, which is critical to their survival in an increasingly competitive auto industry. The alliance also includes Mitsubishi, which joined in 2016.
On Wednesday, Renault will hold its annual shareholder meeting, where the future of the alliance and the collapse of Fiat deal will undoubtedly come up.
Peter Wells, a professor at Cardiff Business School in Wales, said Nissan and Renault needed each other, despite their recent troubles.
The two companies have a long history of cooperation, which would be hard to duplicate with other partners, Mr. Wells said. Alliances take years to deliver benefits because of the time it takes to develop new vehicles and begin sharing the costs of production and purchasing.The two companies have a long history of cooperation, which would be hard to duplicate with other partners, Mr. Wells said. Alliances take years to deliver benefits because of the time it takes to develop new vehicles and begin sharing the costs of production and purchasing.
“I still think Renault-Nissan is a viable concept,” Mr. Wells said. “They have been together a long time. They have gotten to the point where it’s madness to walk away from that. They need to find ways to keep making this work.”“I still think Renault-Nissan is a viable concept,” Mr. Wells said. “They have been together a long time. They have gotten to the point where it’s madness to walk away from that. They need to find ways to keep making this work.”
One major sticking point has been the shareholding structure of the alliance, whereby Renault exercises significant control over Nissan, despite being the smaller and less successful partner. One major sticking point has been the shareholding structure of the alliance. Renault exercises significant control over Nissan despite being the smaller and less successful partner, while Nissan owns a 15 percent nonvoting stake in Renault.
The situation has long been an irritant to Nissan, but their ties seemed to have hit a new low in recent weeks as maneuvers around a proposed deal between Renault and Fiat Chrysler exposed deep mistrust between the Japanese and French companies.The situation has long been an irritant to Nissan, but their ties seemed to have hit a new low in recent weeks as maneuvers around a proposed deal between Renault and Fiat Chrysler exposed deep mistrust between the Japanese and French companies.
The deal, which would have made Renault and Fiat Chrysler the world’s third-largest carmaker, was negotiated without Nissan’s knowledge, and executives at the company were caught off-guard when news of an impending deal appeared in the news media. The deal, which would have made Renault and Fiat Chrysler the world’s third-largest carmaker, was negotiated without Nissan’s knowledge, and executives at the company were caught off guard when news of an impending deal appeared in the news media.
Nissan declined to endorse the deal, which subsequently fell apart after the French government — which is a major shareholder in Renault — insisted that the Japanese company sign off on it.Nissan declined to endorse the deal, which subsequently fell apart after the French government — which is a major shareholder in Renault — insisted that the Japanese company sign off on it.
Speculation swirled Monday that the merger might rise from the dead after a representative of John Elkann, the Fiat Chrysler chairman, met with Nissan executives. But a person with knowledge of the meeting, who spoke on condition of anonymity to describe private conversation, said it had been scheduled before the merger fell apart, and was seen by Fiat Chrysler simply as a chance to explain directly to Nissan what had happened.
In a sign that Fiat Chrysler is moving on, the company’s unit in the United States said Monday that it had signed a preliminary agreement with Aurora, a Silicon Valley company, to develop self-driving commercial vehicles.
One of the rationales for the merger with Renault was that it would allow the companies to share the cost of autonomous driving technology that is expected to revolutionize the auto industry but is extremely expensive to develop.