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Nissan, associated with a Renault-Fiat merger, would face a much less independent future




Nissan Motor Co. could find himself chained to a much larger gorilla when Renault SA and Fiat Chrysler Automobiles NV continue with a plan to smidge closer ties. The Japanese car manufacturer doesn't like it, but can't have much choice.

Fiat Chrysler announced a merger plan Monday with Renault, Nissan's partner for two decades, which could create the world's third largest automaker. While the couple are not seeking a merger with Nissan for now, they plan to eventually invite Nissan and Mitsubishi Motors Corp., Renault's existing global alliance partners, to join forces, sources say.

Nissan is not involved in conversations between the two European car companies and does not see a comprehensive agreement between them as a positive development, people knowing the matter said. Nissan is not interested in a scenario that pursues car sales for the sake of volume, says the sources, and asks not to be identified because Nissan's attitude is not public.

"Given that Nissan has been opposed to a merger, the question is whether to force one to work at all," said Koji Endo, an analyst at SBI Securities in Tokyo. "It won't work if Nissan is forced "1[ads1]9659002] Fiat Chrysler is dependent on the US market, where there are incentives that are even higher than Nissan, not even attractive, a source said. A representative of Yokohama-based Nissan refused to comment.

Nissan was left with little effort after the November arrest of Carlos Ghosn, the architect and chairman of the three-way alliance, for alleged economic crimes during his time as the leader of the Japanese automaker. Coming in a time of rebellion in the global automotive industry and falling profits for Nissan, the company found itself under greater pressure to merge with Renault.

Although Nissan has Knowing its independence in the partnership, it struggles to keep up with global rivals. Rapidly by slashing US sales, aging vehicle models and an unknown product cycle, the automaker has provided the prospect of weak operating profit and cut dividends for the first time in a decade.

Renault and Fiat Chrysler estimate cost savings of more than $ 5 million ($ 613 million) as a result of their deal, and an additional $ 1 million in savings for alliance partners Nissan and Mitsubishi Motors.

Renault and Fiat Chrysler gathered 8.7 million cars last year, which would celebrate the couple by South Korea's Hyundai Motor Co. and Detroit's General Motors Co. The world's two largest automakers, Volkswagen AG and Toyota Motor Corp., each peaked 10 million vehicles last year.

Although Renault owns a 43 percent stake in Nissan, the Japanese automaker is the largest sales partner and owns 15 percent of Renault, without voting rights. Nissan sold 5.65 million cars last year, more than Renault's 3.88 million units, but profitability has declined. Last year, Nissan's operating profit fell under Renaults for the first time in a decade.

All this will make it easier for Renault to push for changes. The likely scenario will be a loose partnership to compete globally, according to Arifumi Yoshida, an analyst at Citigroup Global Markets Japan Inc.

"We see potential synergies between Chrysler's strengths in large framed cars and large SUVs , Fiat's and Renault's small-car forces, Nissan's medium-sized monocoque (single-shell) cars and Mitsubishi ASEAN's market situation, "Yoshida wrote in a research paper. "Nissan can welcome such an alliance, provided it is loose."

Behind the conversation is a strong pressure on car manufacturers to combine efforts and investments as the industry is undergoing major shifts. With sales falling in the world's largest car markets, manufacturers are being pushed by regulators to electrify and reduce fleet emissions. They have also been forced to spend heavily on self-propelled technology or risk being left behind by new, deep-pocketed competitors like Alphabet Inc.'s Waymo.

"There is not much overlap and the most important thing is to find synergies between Renault and Fiat Chrysler," Endo says. "Nevertheless, the merger negotiations will put pressure on Nissan."



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