The Renault-Nissan alliance is in a tight spot without Ghosn’s glue

Since his arrest, imprisonment and Lupine-esque escape from the clutches of Japanese justice in 2018, a popular assessment of Carlos Ghosn has been that he was the glue that held the Renault-Nissan auto alliance together for almost two decades.

The analogy works pretty well. In addition to his skills as a businessman, he undoubtedly had powerful adhesive-like qualities – alternately viscous and rigid, an ideal fixer for cracks and an effective binder for surfaces that would fall apart if left to the force of gravity.

Now that the companies have engaged in emergency talks about transforming the alliance for the electric vehicle era, it’s beginning to look like they could benefit from some sort of fixative, even – and perhaps most usefully – a rubber band. It’s been a long time since the once groundbreaking alliance between Renault and Nissan was anything but a cautionary tale. After all, it can be a positive lesson for the global industry.

The talks, for which Renault boss Luca de Meo flew to Japan earlier this month, were painfully overdue. And while the underlying reasons things are so bad are complex, the Ghosn-as-glue metaphor has become the easiest narrative of the last four years to understand because things have clearly resolved themselves in the former supremo’s absence .

Quite apart from the financial woes reported by both companies, the alliance has been creeping towards what looks very much like a partnership in name only. Executives in both Paris and Yokohama privately describe an almost dysfunctional working relationship with existing joint projects and a mutual distrust that makes new projects seem implausible. Still, the Alliance has braced itself for a monumental series of stress tests as it seeks to reinvent the entire marriage as a challenger to Tesla.

In this dire situation, however, a way out has emerged. After two years under de Meo’s more pragmatic leadership, Renault needs investment from Nissan in an electric vehicle venture and formal approval to transfer technology to an internal combustion engine joint venture with China’s Geely.

Nissan, meanwhile, sees these requests as a golden opportunity to end the imbalance at the heart of the relationship. Renault owns 43 percent of the shares and voting rights in its larger Japanese partner, which in turn holds only 15 percent and no voting rights in the French company. Nissan’s proposal, people close to the discussions say, is that the mutual stakes be adjusted to 15 percent.

The imbalance – increasingly loathed by Nissan, as a reminder of the bailout that led to the existence of Renault’s large stake and a mechanism for what it sees as continued exploitation by its partner – was the main stress point that required all the gluing by Ghosn.

Since the talks became known, some analysts have viewed this as a positive sign. There are numerous obstacles to a deal, but the most likely alternative is for the alliance to fall apart just when both companies – along with third alliance partner Mitsubishi – need them more than ever. If a realignment of stakes is accompanied by a new, transparent version of the framework agreement underpinning the alliance, there is at least a chance that the Franco-Japanese giant will play along.

The problem, Nissan executives complain, is that Ghosn has behaved, particularly on the intellectual property issue, as if the groups were connected by something much stronger than they really were. IP was generously shared as a currency of goodwill within an alliance that was unable to coin much of it in any other way. That has made things more hazy than they could ideally be, as spin-off ventures and deals require individual and shared intellectual property to be pulled apart, and as Allianz pushes ahead with €23 billion electrification plans announced in January.

The difficulty created by the Ghosn-era intellectual property regime, people close to both Nissan and Renault say, is that while the alliance will always demand a certain level of loyalty, success in the electric-vehicle era However, this will only happen if both partners acknowledge that it is an open relationship. The electrification of cars (especially the conversion of vehicles into mobile software platforms), the development of battery technology and the phasing out of internal combustion engine models will require a high level of rapid partnership building and IP sharing with parties outside the alliance. Renault, for example, seems to be on the way to deepening its relationship with Google.

The false appeal of the Ghosn glue imagery is that it hinges on the idea of ​​a magical cement – the missing ingredient between the Alliance’s success and the chaos it now finds itself in. The reason a stakes rebalance is so important is that it will symbolically rethink what that relationship might be. If ever glue was really needed, what the alliance needs now, above all else, is flexibility. The Renault-Nissan alliance is in a tight spot without Ghosn’s glue

Adam Bradshaw

TheHitc is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – The content will be deleted within 24 hours.

Related Articles

Back to top button