Possible Renault-FCA Merge a Threat to Nissan’s CEO

The outlook for the 20-year-old Renault-Nissan alliance has clouded since last weekend’s news that Renault and Fiat Chrysler Automobiles are considering a merger.

Nissan CEO Hiroto Saikawa has balked at Renault’s overtures to merge, insisting instead that Nissan first gain more power in making decisions about their partnership. Nissan’s Mitsubishi Motors Corp. affiliate, which joined the alliance in 2017, agrees.

Saikawa’s hardline position has won him support within Nissan, which feels Renault has overly dominated their partnership, the Financial Times notes. But his stance also pushed Renault to consider other merger options.

If Renault combines with FCA instead of Nissan, observes say, the French carmaker will gain even more clout in determining the future of its alliance with Nissan, in which it holds a 43% stake.

The situation means “hell for Mr. Saikawa” regardless of what happens, suggests Koji Endo, who heads equity research at Japan’s SBI Securities.

Bringing FCA into the Renault-Nissan mix will weaken Nissan’s position within their alliance. For one thing, FCA’s strong presence in the U.S. would outweigh Nissan’s struggling market position there, FT points out. Until now, Nissan has contributed more than half the alliance’s unit sales and profits. Adding FCA would lower Nissan’s contribution to an estimate 36%, according to The Nikkei.

FCA and Renault propose to merge under a Dutch holding company owned 50:50 by the two carmakers. The holding company’s board would consist of 11 directors, including four each from FCA and Renault and one from Nissan, which owns 15% of Renault.