The conflict between Russia and Ukraine has been a significant source of terror and issues for many people and companies worldwide. However, for the alliance between Nissan
and Renault, this conflict potentially places excess pressure on what has already been a complicated and tentative relationship. And with Nissan making moves like looking into solid-state battery manufacturing
, their position cannot afford much tension from Renault. In addition to large car manufacturers, the war between Russia and Ukraine may have ramifications for many car owners and their insurance rates. Therefore, it's vital to have a trustworthy resource for comparing insurance
quotes to stay ahead of global events and maintain affordable car insurance. Why did the alliance between Nissan and Renault begin?
In 1998, during a period of rapid consolidation within the automobile industry, Japanese manufacturer Nissan was in financial trouble. Renault, an automaker based in France, proposed an alliance to help the struggling Nissan turn its operations around. A Renault team led by businessman and alliance CEO Carlos Ghosn helped revitalize Nissan throughout the early 2000s, leading to innovations such as technology to help reduce drunk driving accidents.
When the alliance started, Renault purchased 36.8% of Nissan's outstanding stock, with Nissan promising to buy into Renault once the company was more financially stable. Following Nissan's revival, the Japanese automaker bought 15% of Renault's stock. Renault, meanwhile, increased their stake in Nissan to 43.4%.
How did the alliance lead to a strained partnership?
With 43.4% ownership of Nissan, Renault maintains significant voting power within the company and among its board seats. On the other hand, Nissan controls a much smaller stake in Renault. In addition, Nissan has a non-voting stake, meaning they have no influence over Renault.
Compounding this situation is the fact that the French government is the single largest shareholder in Renault. Because Nissan policy is significantly under Renault's control, the French government potentially has a position of control over a car company based in Japan. And when the French government attempted to consolidate its control over Renault and, by extension, Nissan in 2015, it became more evident where the majority of the power in the alliance was located.
In 2018, Carlos Ghosn began talks to fully merge Nissan and Renault, discussing making the alliance between the companies "irreversible". Because of Renault's voting rights and power, a merger would've placed both Renault and Nissan squarely under French control. However, Ghosn was arrested later that year on allegations of grossly underreporting his salary and misusing company funds, making tensions between Nissan and Renault more difficult.
MORE: Renault's New EV Crossover Has A Unique Safety Feature
The Russia-Ukraine conflict disrupts Renault's operations and plans
As reported by Forbes
, Renault has been facing issues with expanding its production because of the war in Ukraine. Renault planned to focus on higher quality of sales rather than sales volume, and they initially set these plans to begin with restarting production at AvtoVAZ, Renault's Russian subsidiary. However, multiple protests from countries imposing economic sanctions against Russia have caused Renault to back down from doing so. Because of the shift away from AvtoVAZ, Renault faces a potential cost of $2.42 billion for suspending its operations in Russia. This significant financial hit has raised questions about Renault's long-term prospects and projects, such as plans to revolutionize the rideshare industry. Of course, the upheaval has also brought the contentious partnership with Nissan back to the forefront.
With Renault in a weakened state, thanks to future financial plans being put on hold, many commentators have suggested that the French automaker sell some of its 43% stake back to Nissan. Doing so would help narrow the gap in power between the two companies, put them on a more even footing, and raise a significant amount of capital for Renault.
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