By Gilles Guillaume
PARIS (Reuters) -Automakers Renault and Nissan said on Monday they had agreed to further amend their two-decade-old partnership to allow for a reduction in their cross-shareholdings in a move aimed at helping Nissan’s recovery.
The change in terms, lowering the required shareholding to 10% from 15% previously, comes a day before Ivan Espinosa takes over as CEO of the struggling Japanese carmaker, under pressure to significantly boost its competitiveness.
Nissan will also be released from its commitment to invest in Renault’s electric vehicle unit Ampere, for which it had pledged 600 million euros ($648.96 million).
“As a long-time partner of Nissan within the alliance and as its main shareholder, Renault Group has a strong interest in seeing Nissan turn around its performance as quickly as possible,” said Renault CEO Luca de Meo in a statement.
Renault also announced its intention to buy out Nissan’s majority stake in their joint Indian business, Renault Nissan Automotive India Private Ltd (RNAIPL), with the expected completion of the deal by the end of the first half of this year.
As a result, Nissan will cease making cars in the world’s third-largest auto market and will focus on sales and service.
Renault will continue to make cars for Nissan at the venture’s factory in India’s southern state of Tamil Nadu. The plant can produce over 400,000 cars a year but is only running at about a third of that capacity, industry data shows.
“Nissan is committed to preserving the value and benefits of our strategic partnership within the Alliance while implementing turnaround measures to enhance efficiencies,” said incoming CEO Espinosa in the statement.
Espinosa, previously Nissan’s chief planning officer, was appointed in early March to succeed Makoto Uchida, after deteriorating results at Japan’s third-largest automaker and unsuccessful negotiations for a merger with Honda .
Nissan, in which Renault is the largest shareholder with 17.05% of the capital held directly, has been plagued for years by declining sales.
It has struggled to recover from the downfall of former boss Carlos Ghosn, architect of the Renault-Nissan alliance, who was accused by the Tokyo prosecutor’s office of financial misconduct, which he denies.
Renault confirmed its forecast of free cash flow of at least 2 billion euros in 2025, despite an impact of approximately 200 million euros from acquiring Nissan’s stake in the Indian business.
“The decision today gives Nissan additional flexibility, which would be the possibility for Nissan to sell assets and increase their cash position,” Renault CFO Duncan Minto told journalists. He said having such ability would help Nissan restructure.
The amendment to the alliance agreement, which in 2023 established a rebalancing of cross-shareholdings, and the termination of Nissan’s investment agreement in Ampere, are subject to certain preconditions being fulfilled, expected by the end of May, the companies said.
($1 = 0.9246 euros)
(Reporting by Gilles Guillaume in Paris and Aditi Shah in Delhi. Writing by Dominique Patton; Editing by Kirsten Donovan and Tomasz Janowski)
