On Monday, at a press conference in London the ‘new Alliance’ was presented. The aim is to have a more balanced relationship and start a new joint project after a long period of turbulence and disagreements within the Alliance.

Mid-January, the seven independent members of the Nissan Board of Directors agreed with the planned restructuring of the Alliance Renault/Nissan/Mitsubishi. After months of tense negotiations, the independent Nissan board members (seven out of twelve) have finally conceded.

One of the last persons to resist was Masakuza Toyoda (no direct link with the Japanese number one car manufacturer), a board member who had a long career at METI, the powerful Japanese Ministry of Industry.

“It’s the ambition to reinforce the Alliance and to maximize value increase for all participating parties,” says the joint press release. Analysts are persuaded that “the Alliance will work better and that new, interesting projects will lead to additional synergies without having to invest huge amounts of money”.

Rebalancing

Until now, there was a severe imbalance between Nissan and Renault, the latter detaining 43,4% of the shares of the Nissan capital while the Japanese number two only had 15% in Renault. In the new structure, they will both have 15%. The remaining 28,4% Renault had in Nissan until now will not be immediately put on the market but will stay temporarily in a fund.

At the moment, that 28,4% represents far less than what was estimated earlier, and the new agreement says that they can’t be sold when the course is too low (estimated at €3,8 billion at the current market price, which would be bad for Renault) or to a buyer who indirectly can harm Nissan. The latter now also has the voting rights in the Renault board it is entitled to because of its shares but was deprived of until now.

Nissan will also step into Ampère, Renault’s new electric identity. The amount of participation is not yet defined, but it should not surpass 15%. Renault expects a value of €10 billion for Ampère. Moreover, the Japanese won’t oppose themselves anymore to the creation of Horse, another entity within Renault dedicated to developing and producing ICE engines.

Horse will also have the Chinese car manufacturing group Geely (40%) and the Saudi state company Aramco (20%) among its shareholders. Nissan was afraid that part of its technology and intellectual property would evaporate. After lengthy discussions and negotiations about all sorts of parts and equipment co-developed by Nissan and Renault, an agreement on this tricky point has been reached. Nissan will also be a Horse client for the ICE drivetrains it will still need.

Japanese suspiciousness

Until now, the Japanese board members at Nissan were pretty suspicious of the French moves, remembering the French Minister of Economy Emmanuel Macron (now President) in 2015 deciding that the voting rights of the French state (then detaining 19,7% of Renault shares) were doubled, while the Japanese still had none.

It was the first crack in the faith and trust the Japanese had in their former savior, Carlos Ghosn. The spectacular fall of Carlos Ghosn in 2018 and the French plans for a merger of the two car companies in the future cooled down the relationships even further. That Renault was also courting Fiat Chrysler in 2019 but finally lost the battle to PSA didn’t arrange things either.

Meanwhile, the so-called Rama agreements were signed, limiting the maneuverability of the Renault shareholder within the Nissan board. But on the political side, things changed very recently. On the 9th of January, Japanese Prime Minister Fumio Kishida visited Emmanuel Macron to prepare for the pending G7 meeting.

The French President confirmed his full support for the restructuring and rebalancing of the Alliance. This was again confirmed in a letter from the French Economy Minister to its Japanese colleague at the Ministry of Industry.

Finally, peace was settled, and Renault didn’t have to use its last way out, the so-called ‘nuclear option,’ selling 28,4% of its shares in Nissan to the best offer.

A new, more transparent, and balanced agreement

With the new agreement, the Alliance should be rescued from all the misunderstandings, and things left unsaid in the past, poisoning all good relationships. The Rama deal is replaced by a much more transparent agreement, far less prone to different interpretations from both sides.

The new industrial and commercial Alliance won’t be that tight anymore. Each manufacturer is entitled to have its own projects for the future without hampering those in common. It will be a ‘variable geometry’ Alliance. The new propositions for common new projects came almost all from Renault, CEO Luca de Meo admits.

There’s Argentina: the Frontier pick-up from Nissan is produced over there in the Renault factory of Cordoba. de Meo has asked the people at Nissan if they want to continue that and if they want to develop a new common pick-up as a successor. In Mexico, Renault will be able to produce a Renault product at the side of several Nissans in their Mexican plant. In the future, two electric cars in the A segment are planned for the South American continent.

In India, Renault wants to collaborate with Nissan, which is already well established in that huge potential market. Both makes will collaborate on SUVs, and Nissan will further develop a car based on the Renault Triber crossover, introduced on the market in 2019.

In Europe, Renault and Mitsubishi will co-develop the new ASX and Colt, two cars that will be based on the Renault Captur and Clio successors. The new Nissan Micra will be fully electric and have a lot in common with the new electric Renault 5. They will be built in the same European plants of Renault.

Both sides were not so happy with the ‘leader-follower’ principle deployed some years ago, where the different brands within the Alliance were the leader in some markets of the world and the follower in others. From now on, the Alliance partners will focus on their own strengths and collaborate as much as possible where that is needed and beneficiary.

The final objective is fairly obvious: collaboration means more efficiency and fewer costs, heightening profits. According to Luca de Meo, this could rise to billions of euros by 2025 if all goes well. de Meo said that he wants to have an operating margin of 8% again in 2025 and 10% by 2030.

In 2018, the Alliance was the number-one manufacturer in the world; in 2022, it reversed to the fourth position, with Renault regressing by 23,9% of sales worldwide and Nissan by 20,7%. “This ‘new’ Alliance is the return of confidence; we will witness an acceleration in history,” Jean-Dominique Senard concluded. And Luca de Meo pragmatically added: “We don’t have time to lose anymore. Every company has to shape its own destiny. The Alliance is not a goal in itself but an additional opportunity.”

An example of collaboration that could earn a lot of money in the future is the announcement yesterday in the British car magazine Autocar, where David Moss, Nissan’s VP for R&D in Europe, pronounces itself on the solid-state battery. “We think we have something quite special and are in a group leading the technology. We want to get the cost down [compared with lithium-ion batteries] by 50%, to double the energy density, and to offer three times the charging speed.”