Renault-Nissan-Mitsubishi has become the world’s biggest carmaker

By The Economist online…

RENAULT unveiled the EZ-GO, a concept for a robotaxi, at the Geneva motor show, which opened on March 5th. Nissan, in conjunction with DeNA, a Japanese software firm, recently began trials of driverless taxis in Japan. The two companies are pursuing their own paths towards the future of mobility. Yet both are bound together in a close alliance, which celebrates its 20th anniversary next year. In 2016 they were joined by Mitsubishi. Last year the trio sold 10.6m cars between them, one in every nine worldwide.

It is a unique carmaking liaison, neither a full merger nor as loose as the many tie-ups forged to spread the cost of developing pricey pieces of technology. Each firm remains autonomous but shares a growing number of links in the supply chain with the other two. It all looks hugely successful. In 2017 Renault-Nissan-Mitsubishi overtook Volkswagen (VW) as the world’s biggest car company (if lorries are included, the German firm is narrowly ahead).

Yet enthusiasm for the alliance among petrolheads and analysts is muted. Despite making some sporty models—Renault even runs a Formula 1 team—the group lacks a brand such as VW’s Porsche to set car-buyers’ pulses racing. Those who pore over its financial performance use words like “decent” and “reasonable”. The mass market is competitive and margins are low. Investors cringe at a complex structure. Renault owns a controlling 43.4% of Nissan; Nissan has a non-voting 15% stake in Renault. Mitsubishi is controlled by Nissan through a 34% stake. Carlos Ghosn (pictured) is chairman of all three firms. Last year he stepped down as boss of Nissan but still runs Renault, plus the alliance itself, with its own board and executives.

Hence the calls for a simpler structure, which could cut costs and shore up profits. The current one gives Renault, itself 15% owned by the French state, the upper hand. Yet Nissan, rescued from near-bankruptcy by Mr Ghosn in 1999, now makes more cars and money. When rumours surfaced recently that France may sell its stake to Nissan as a prelude to a full merger, Renault’s shares soared by 9%, revealing what investors think of the structure—and the government’s involvement. (The alliance has denied the reports.)

French intentions are hard to fathom. Mr Ghosn and Emmanuel Macron, France’s president, have a history. As finance minister in 2015, Mr Macron briefly increased France’s stake in Renault to 20%, apparently to block Mr Ghosn from pushing through a change to company bylaws that would have inoculated it against a new law granting double voting rights to long-term shareholders. He also reportedly wanted a merger that would keep France as the main shareholder, the better to preserve French interests and jobs.

Mr Macron now insists he wants to get the French state out of business. But he still sees Renault as a symbol of French manufacturing might. He may be reluctant to allow closer integration along the lines Mr Ghosn, who opposes state involvement, has in mind. But the appointment in February of Thierry Bolloré, a Frenchman (and likely successor to Mr Ghosn), to a new role of chief operating officer of Renault may persuade Mr Macron that a merger would safeguard Renault’s position at home.Read more here: Renault-Nissan-Mitsubishi has become the world’s biggest carmaker…read more

Category: Business and finance, Approved, Business, Business

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