How has this not happened already?

Despite sharing a name — the Nissan-Renault-Mitsubishi Alliance — and a parent company, Nissan and Renault are still two independent automakers that handle their business their own way. Don’t look now, but that could change soon as reports are surfacing that Renault SA and Nissan Motor Co. are in discussions of a potential merge that would bring their 20-year partnership together under a single name. Details of the potential merge are still unclear, but it is believed that the shift towards electrification and shared mobility have a lot to do with it.

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If the companies were to merge, it would create a massive entity that can collect all the resources of both companies and put them under one roof

This is an industry-shaking move if it happens. Depending on the metrics that are being used, the Alliance is either the biggest, the second biggest, or the third biggest automaker in the world. According to Forbes, the automaker has been on a dead-heat race with Toyota and Volkswagen for the title of the biggest automaker in the world for some time now.

If the companies were to merge, it would create a massive entity that can collect all the resources of both companies and put them under one roof. The sound that you’re hearing is the sweat drops coming from Volkswagen AG and Toyota Motor Corp, the two automotive giants that have been jostling with the Alliance for volume supremacy.

Specific details behind the possible transaction are still being kept under wraps, but it is believed that Nissan would give Renault shareholders stock in the new company while Nissan shareholders would receive their own shares in the new company in exchange for their holdings. Renault and Nissan chairman Carlos Ghosn would also assume the role as chairman of the proposed merged company. News of a potential merger is already generating over-the-counter reactions as Renault shares jumped by 8.3 percent, giving Renault a market value of around $36 billion. Likewise, Nissan’s stock spiked by 0.5 percent, giving the Japanese automaker a market value of $44 billion.

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Even if both companies are keen on the idea, getting it done is going to be difficult

As promising as a Renault-Nissan merge is, it’s also not as easy as it looks. The whole process of this industry-shaking shift will have far-reaching consequences, some of which will not be felt in the short term. Even if both companies are keen on the idea, getting it done is going to be difficult considering that the French government, which owns 15 percent of Renault, may not be too keen on relinquishing its shares or have them watered down to accommodate the Japanese automaker in the fold. There’s also the issue of getting approval from both the French and Japanese governments, something that’s easier said than done given their business and emotional ties with Renault and Nissan, respectively.

“The concern has always primarily been the French government, and somewhat Japan because both France and Japan like to keep their national champions,” Macquarie analyst Janet Lewis told Bloomberg.

There’s also the issue of Mitsubishi and what happens to it if Nissan and Renault become one, big giant brand. Will Mitsubishi be absorbed too? Will it run as an independent automaker?

Evidently, there are more questions than answers at this point, and neither Nissan nor Renault are tipping their hats to give an indication of where the discussions are at the moment. Rest assured, though, if this union does become a real thing, it would shake the auto industry to its core.

“To compete against the Toyotas, Renault-Nissan-Mitsubishi very much has to do it as one big group,” Lewis added.

We’ll know soon enough if that ends up happening.

References

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Source: Bloomberg

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