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Nissan's Ghosn crisis

Renault presses Nissan again for merger

Japanese automaker set to reject latest push for closer alliance

Renault has long sought to make its alliance with Nissan irreversible. (Photo by Yuki Nakao)

TOKYO -- Renault has made a fresh attempt to integrate with Nissan Motor, barely a month after the French automaker's new chairman insisted that such a move was not on the agenda, Nikkei learned on Monday.

The latest proposal came in the last two weeks, sources familiar with the matter said.

Nissan is expected to reject the proposal and push instead for a more equal capital relationship in the world's second-largest automaker alliance by sales. Renault owns 43.3% of Nissan, while Nissan has just a 15% stake in the French carmaker, but without voting rights.

News that the French carmaker is again pushing integration -- long the desire of the French government, which holds a 15% stake in Renault -- will heighten tensions in their delicate but crucial carmaking alliance, which also includes Mitsubishi Motors.

Their relationship has already been frayed by the arrest in Japan of their former Chairman Carlos Ghosn for alleged financial misconduct.

"Renault's move [to renew the integration push] will complicate the future of the alliance," one of the sources familiar with the situation said.

Renault, which relies on Nissan for revenue and technology, has argued that management integration would maximize benefits within the French-Japanese carmaking alliance.

The Nissan-Renault-Mitsubishi alliance boasts more than 10.7 million vehicles in annual global sales. But Nissan holds the lead over its French partner in volume, at 5.65 million to 3.88 million.

From Renault's standpoint, the current loose alliance that Nissan favors does not provide enough access to the Japanese automaker's strengths.

One factor driving Renault to try again is the technological change bearing down on the auto industry.

Electric vehicles and self-driving cars require hefty investments in development and capacity, and the French automaker can learn from Nissan in both fields.

Nissan outspent Renault on capital investments by $1 billion in the 2018 fiscal year. Unit sales of Nissan's Leaf electric car totaled about 85,000 worldwide last year, compared with about 39,000 units for its Renault counterpart Zoe. The latter's sales are concentrated in Europe, while the Leaf's reach is broader.

Outside their home markets, the two automakers have complemented each other in geographic strengths, with Nissan generating much of its sales in North America and China while Renault does well in Latin America.

For its part, Nissan's management feels the company has not been treated as Renault's equal under the existing capital ties. It fears a merger or some form of integration under a holding company would make that inequality permanent, the sources said. Senard, who took over from Ghosn in March, ruled out talk of a merger in an interview with Nikkei soon after becoming chairman.

"If I were to talk about a merger, it would be to talk about the intelligent merging of our cultures to make the alliance very efficient. All other ideas would not be relevant," he said. In a separate interview the same month, he also said the companies were not discussing reworking the capital relationship.

Both sides have stressed that the priority since Ghosn's departure is to repair their alliance. But sources said this could now be more difficult.

Nissan's continued resistance to merger proposals shows the Japanese company's deep-seated suspicion of the French government's intentions. Nissan has repeatedly pushed for an equal capital relationship between the two companies, but has been reluctant to increase its stake in Renault as that would be regarded as an aggressive act by the French carmaker.

Nissan executives believe that Ghosn's emphasis on expansion hurt the automaker's earnings. They believe that with Ghosn out of the picture, they can now improve efficiency and enhance corporate value without integration. The French government is expected to continue to press its case, however. It informed Tokyo in January that it would seek a management union under a holding company structure.

Ghosn has denied all wrongdoing and claimed the investigation by Nissan which led to his arrest was a plot by Nissan management to crush his plans for integration between the two companies.

Ghosn was on Monday charged again with aggravated breach of trust. He faces allegations of misusing company funds for personal benefit.

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