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Nissan Becomes Awkward Third Wheel in FCA-Renault Merger

Nissan Becomes Awkward Third Wheel in FCA-Renault Merger

Renault and Nissan practically saved each other back in 1999 when the Renault-Nissan Alliance was formed. Now, two decades later the two automakers appear to be at an impasse with Fiat Chrysler Automobiles asking for a marriage with Renault.

Back in April Renault reportedly made an offer to Nissan to take their alliance to the next level. The proposal was allegedly to integrate the two companies, a task that is not far-fetched given the fact Renault already owns 43 percent of Nissan. Nissan reportedly rejected the offer.

Nissan feels it has not been treated as an equal partner under the alliance. This alleged inequity is the primary reason the company was unwilling to take the alliance to the next level.

Now, enter Fiat Chrysler stage left. With FCA’s proposed “merger of equals” between itself and Groupe Renault. FCA is arguably a stronger suitor for Renault than Nissan. FCA has a considerably stronger presence in North America than Nissan, specifically when it comes to light trucks and other high-margin segments.

Unlike Nissan, FCA also has several premium brands, such as Alfa Romeo and Maserati that would broaden Renault’s reach under the proposed merger.

Meanwhile, Nissan has its own set of problems. The company’s profit continues to decline, to the point its credit rating has just taken a hit. Sales in the U.S. are down thus far in 2019, despite heavy investments into popular SUV segments.

There’s a strong argument to make that Nissan needs a merger just as much as Renault, if not more, to ensure ongoing viability.

Despite the awkwardness, FCA has already stated it aspires to stay in the existing Renault-Nissan-Mitsubishi Alliance if its merger with Renault is finalized. Nissan also sets to gain from the merger, as it is estimated FCA’s involvement in the alliance would yield the alliance about $1 billion in cost savings. FCA has also committed to providing Nissan one seat on the combined entities board of directors.

Will the added scale to the alliance be enough to keep Nissan appeased? Time will tell, but Nissan almost has to be on board with the FCA-Renault merger as they own a 15% state in Groupe Renault.

 

 





 

About Nick Saporito

AutoVerdict Senior Editor Nick Saporito began writing about cars at age 13. Nick ran a couple of automotive enthusiast sites for several years, before taking some time off to focus on his career and education. By day he's a marketing executive in the telecom world and by night he hangs out here at AV. You'll find him focusing on tech, design and the industry's future.
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  1. Andrew_L
    I am really curious to see how this will play out. I have a feeling it will turn into a huge mess.
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