French automaker Renault is helping ease its Alliance partner Nissan’s financial woes by loosening some conditions of the partnership and taking over its Indian auto business.
Renault will take over Nissan’s 51% stake in its India wing, Renault Nissan Automotive India Private Ltd., to own the project outright.
The cash boost for Nissan will allow it to maintain the brand’s presence in India’s growing market while allowing Renault to expand its international business.
RNAIPL will continue to produce Nissan models, including the new Nissan Magnite, its smallest global SUV, and will serve as a pillar for the company's future expansion plans.
Renault continues to make cars for Nissan at the plant in India's southern state of Tamil Nadu; the facility can produce over 400,000 vehicles a year but is only running at about one-third of capacity, industry data shows.
Nissan is also allowed to back away from its future investment commitments of €600 million ($648.96 million) to Renault’s battery-electric Ampere business unit to further boost operating cash while continuing its participation on existing agreed products. This includes developing and producing an all-electric derivative of the Renault Twingo city car for Nissan starting in 2026. This model is designed by Nissan.
The two partners also reduce their mutual stakes from the current 15% to 10%. The 5% reduction in shares allows both automakers to prioritize each other as preferred buyers for the stakes being sold.
Newly appointed Nissan CEO Ivan Espinosa faces a challenge of turning the company’s fortunes around by increasing its ability to compete in a declining global market. He says: “Nissan is committed to preserving the value and benefits of our strategic partnership within the Alliance while implementing turnaround measures to enhance efficiencies. Our goal is to create a more agile and effective business model that allows us to respond quickly to changing market conditions and conserve cash for future investments."
“We remain committed to the Indian market, delivering vehicles tailored to local consumer needs while ensuring top-notch sales and service for our existing and future customers. India will remain a hub for our research and development, digital and other knowledge services," says Espinosa.
Renault CEO Luca de Meo, adds: “As a long-time partner of Nissan within the Alliance and as its main shareholder, Renault Group has a strong interest in seeing Nissan turnaround its performance as quickly as possible. Pragmatism and business-oriented mindset were at the core of our discussions to identify the most effective ways of supporting their recovery plan while developing value-creating business opportunities for Renault Group. This Framework Agreement, beneficial for both parties, is the proof of the agile and efficient mindset of the new Alliance. It also confirms the attractiveness of our products with Twingo as well as our ambition to grow our business on international markets. India is a key automotive market and Renault Group will put in place an efficient industrial footprint and ecosystem.”
