Renault-Nissan Alliance to Restructure for Cost Reduction due to Coronavirus Impact

The Alliance partners led by Renault SA (Renault) and Nissan Motor Co. (Nissan) have reportedly considered plans to restructuring its policies and programs in a bid to survive from the hardship impact caused by the coronavirus outbreak. The alliance has posed challenges to Renault, Nissan, and junior partner Mitsubishi Motors Corp. (Mitsubishi), which joined the alliance in 2016, due to vast differences in corporate cultures and simmering tensions over the Alliance’s capital structure.

Restructuring Renault-Nissan Alliance

The trio-based alliance on Wednesday, May 27, 2020, sought a new plan to revive from the reeling effects caused by the virus pandemic. Explaining the alliance’s latest strategies and the discussion of the car manufacturing companies, a source told Reuters, “There will be restructuring, there will be fixed costs reductions, there will be a number of projects which will be reduced.”

Renault and Nissan announced the last strategic plan for their Alliance in September 2017, with a goal to become the world’s biggest automaker by 2022. However, their long-term aim had been hampered due to the unprecedented twist brought by the pandemic and the companies’ profits fell substantially. As a result, the automakers announced to begin separate restructuring plans later this week as part of coronavirus response while thousands of employees were worried about losing their jobs.

The reworked Alliance would be mainly focusing on more systematic divisions of labor, with one partner leading for a particular type of vehicle and geography while the others follow. A source close to Renault said, “The plan will have a positive spirit, based on a clear leader-follower scheme and on the complementarity between companies.”

Required a Deeper Cooperation

Despite several attempts made by the companies to rework their partnership, the prevailing internal challenges of the alliance persisted among the three automobile manufacturing companies and it was getting worse after the arrest of Nissan chairman and chief architect, Carlos Ghosn in 2018.

With the harsh condition of the virus impact, Renault sought a 5 billion euros ($5.5 billion) in state-guaranteed loans as for rescue package from the French government. In return, the French government, which owns 15% of Renault, urged Renault to invest in electric vehicles, advanced batteries, and other technology to support jobs in France. The French state has already considered supporting the automobile and will now become a not-so-silent partner in the Alliance.

Alliance’s Chairman, Jean-Dominique Senard said earlier this year that the carmakers had “no other option” but to deepen cooperation among the partners while senior alliance sources revealed that to convene a talk for a full merger deal has been dropped for now.

I’m Roshan, a journalist, blogger and music lover. I like covering global news related to finance, business, and technology. Focusing on the collection of true and reliable information, I rely on working by conducting interviews with business leaders and talking to the inside sources of companies.

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