Is the Renault-Nissan-Mitsubishi Alliance coming to an end? This could be the case, if a report by Bloomberg is right. Citing unidentified sources, the news agency said Nissan is reportedly looking to sell some or all of its 34% stake in Mitsubishi Motors Corporation (MMC).
The report said that Japan’s third-largest automaker could sell its stake to a Mitsubishi group company such as Mitsubishi Corporation, which owns a fifth of MMC. Such a move would reshape the three-way alliance, which is only four years old, and of which much was expected.
In May 2016, Nissan became MMC’s largest shareholder when it acquired a 34% equity stake in the latter for 237 billion yen in the wake of MMC’s fuel economy scandal, which hit the automaker hard. In October that year, MMC was formally incorporated into the Nissan-Renault Alliance as a full member.
The Covid-19 pandemic has wreaked havoc on the alliance, which was already shaken by the business surrounding former chairman Carlos Ghosn before the coronavirus arrived to amplify the situation further. All three partners have reported losses, and the forecasts aren’t positive either.
In May, Nissan reported a net loss of 671 billion yen (RM26.4 billion) for fiscal 2019, its worst in 20 years, and had in July forecast that it expected to post a similar 670 billion yen net loss in 2020. Last week, the automaker – which is 43% owned by Renault – cut its operating loss forecast for the year to March by 28%, saying that restructuring efforts and better than expected sales in China were helping.
Mitsubishi, Japan’s sixth-largest automaker, reported a 25.78 billion yen (RM1.04 billion) net loss for 2019, and says it is anticipating a net loss of 360 billion yen (RM14.4 billion) for fiscal 2020. Meanwhile, Renault posted a record 7.29 billion euro loss for the first half of 2020, and has said that it may have to implement further cost-cutting measures on top of the two billion euro cost cuts it has already set in motion.
In May, the alliance reaffirmed their commitment and announced several initiatives as part of a new cooperation business model to enhance the competitiveness and profitability of all three players. It was planned to build on existing alliance benefits in areas such as joint purchasing and also cement standardisation strategies further by introducing a leader-follower scheme for vehicle production.
Besides taking the lead for particular models that they’re strong in, each of the member companies would be in charge of “reference regions” as well, with Nissan being the reference for China, North America and Japan, while Renault would do the same in Europe, Russia, South America and North Africa, and MMC in ASEAN and Oceania. Whether this will now happen in its entirety is up in the air, given the potential move.
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