There is no easy way to spin the disastrous performance of the Renault, Nissan and Mitsubishi Motors alliance since the ouster of CEO Carlos Ghosn four years ago.
Each automaker’s production, sales and market share have fallen significantly since Ghosn’s forced departure in November 2018. Losses have totaled nearly $35 billion, $30 billion of that at Nissan and Renault, while their share prices have seen a similar decline – in the case of Nissan, 60%.
It is against this backdrop that Monday’s announcement about overhauling the 23-year-old alliance must be seen.
The new version of the alliance, coming after several false starts, will remove any of the remaining vestiges of the Ghosn years. The automakers – Mitsubishi was not mentioned in the announcement – have agreed to rebalance and equalize their respective equity holdings and board representation.
Under the agreement, which is still subject to board approval, each will hold 15% equity in the other, with Renault reducing its existing holding in Nissan from 43.4% while transferring the remaining 28.4% (an estimated $3.7 billion) into a trust account in France.
The automakers also will have equal representation on their respective boards (at present they do not), and they reaffirmed that alliance decisions will be made consensually.
Meanwhile, they will collaborate on several projects – reportedly in India, Latin America and Europe – but none in markets likely to have a significant impact on volume sales and surely none that would lead to a broader integration of their respective supply bases.
Their products simply do not mix and match well. Renault’s main market is Europe. Nissan’s focus is on North America and China, although it is a small player in both. In 2022, Nissan sales in the U.S., including Infiniti, fell to the lowest level since 2001; Infiniti sales were the lowest since the 1990s.
Of the projects reportedly planned, Nissan’s decision to support Renault’s Ampere electric-vehicle project (pictured, below) has received considerable interest. The reality, however, is that the automakers have moved out of the first tier of EV makers even counting affiliated brands such as Dacia and Venucia. And individually, Nissan has fallen out of the top 20.
“Nissan has gone from being number one (in EV production) to being virtually nonexistent,” says Viktor Irie, an analyst at EV Volumes, a Swedish market research company.
There was no mention of Renault’s strategic “framework” agreement, signed last November, with China’s Geely to focus on conventional and hybrid cars.
Can the new alliance work?
Critics think not. A former insider asserted that “If you’re going to sell down” – from 43% to 15% – “and there's no central control where anybody has the authority to really push synergies, practically speaking it’s a divorce.”
Another feels this is just a face-saving way for Renault to exit.
Ghosn (pictured, below left), who built the alliance, was quoted in Asia Times as saying: “Generally this kind of cross-holding can exist only if there is trust between the parties. When the trust disappears, it’s over. Obviously, there’s no longer any trust except in their public statements.”
Time will tell whether that’s the case.
But the numbers don’t lie. Comparing 2018, Ghosn’s final year, to today:
In 2018, alliance sales grew to 10.8 million units as the group claimed the No.1 position globally, ahead of both Volkswagen and Toyota. In 2022, sales fell to 6.4 million as the alliance slipped to fourth place behind the Toyota, VW and Hyundai groups, with Stellantis closing in fast on the fifth spot.
At the time of Ghosn's November 2018 arrest, he was in process of closing a deal with Fiat Chrysler Automobiles, which would have added the profitable Jeep and Ram Truck brands to the alliance and another 1.5 million units of sales. FCA subsequently merged with the Peugeot group to form Stellantis.
The alliance’s market share has fallen from 12% to 8% during the past four years.
In key markets, Nissan sales in the U.S. fell from 1.5 million in 2018 to 729,349 in 2022; in Europe, from 684,769 to 286,225; and in China, from 1.6 million to slightly more than 1.0 million.
Ghosn critics feel he took his eye off the U.S. market and failed to freshen Nissan’s lineup. Others counter that he was focused on expanding the alliance and building market share through addition. And Fiat Chrysler was in his sights, according to his book, “Broken Alliances: Inside the Rise and Fall of a Global Automotive Empire,” which he co-authored with French journalist Philippe Riès.
That said, Nissan’s U.S. sales fell 25% last year despite a substantially freshened lineup. We will find out if there is a problem on Feb. 9, when the automaker announces its third-quarter 2022 financial results.
Meanwhile, Renault sales have fallen in France, its largest country market, from 689,788 in 2018 to 420,280 in 2022. It now ranks second to Peugeot in the market.
And while all three automakers are profitable again, profit margins in this, the fourth post-Ghosn year, are roughly half of average profits during the Ghosn years and significantly lower than those of other leading manufacturers.
A year ago, analyst
, Koji Endo said Nissan “is effectively where it was when Carlos Ghosn arrived in 1999.” That hasn’t changed.