March 12, 2019 / 12:11 PM / 3 months ago

Breakingviews - Renault-Nissan love-in swerves main bumps in road

Renault CEO Thierry Bollore, Renault Chairman Jean-Dominique Senard, Nissan CEO Hiroto Saikawa, Mitsubishi Motors Chairman and CEO Osamu Masuko shake hands at the end of a joint news conference in Yokohama, Japan, March 12, 2019.

LONDON (Reuters Breakingviews) - Renault and Nissan Motor’s Yokohama love-in swerves around the main issues with the carmakers’ alliance. The French auto group has agreed its chair will no longer hold the same position at its Japanese partner, as it did under former leader Carlos Ghosn. But wider talk of equality is no substitute for solving the alliance’s fundamental problems.

The partners on Tuesday unveiled a “new start” to the alliance at a press conference in Nissan’s headquarters in Yokohama, Japan. Ties were strained after Ghosn’s arrest last year on misconduct charges, which he denies. Nissan’s Chief Executive Hiroto Saikawa complained that too much power was concentrated in one person, with Ghosn chairing all three groups as well as the Dutch holding company that governed alliance relations.

That grievance has at least partly been solved. Ghosn’s replacement as chairman at Renault, Jean-Dominique Senard, will head a new joint board overseeing alliance operations. But he won’t chair Nissan. That will help soothe Japanese fears of being under the thumb of its major shareholder, Renault, which itself is 15 percent owned by the French government.

That’s a small step, however, compared with the long-term task of solving the lopsided cross-shareholding structure. Renault owns 43 percent of Nissan, but the Japanese group holds a relatively small, non-voting 15 percent stake in its French partner. Neither side seems ready to address that suboptimal structure, under which both incur a hefty stock-market discount on their equity holdings. One option would be for Renault to sell down its stake to equalise things, but it’s hard to see them doing so without getting anything in return.

An even bigger problem is the French government’s unsubtle meddling in alliance affairs. It played a major role in selecting Ghosn’s successors as chairman and chief executive at Renault. Nissan directors could justifiably object to any moves towards closer cooperation while the Elysée Palace is watching over their shoulders. Fresh start or not, the gremlins under the bonnet are still there.

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