Today's Paper Search Latest App In the news Traffic #Gazette200 Listen Digital FAQ Weather Newsletters Obits Puzzles/Games Archive
ADVERTISEMENT

TOKYO -- The cracks in the world's largest auto alliance grew wider Monday, as Nissan Motor condemned as "most regrettable" a decision by its French partner, Renault, to withdraw support for the Japanese automaker's efforts to overhaul its governance.

The message marks a new low in the relationship and reflects the fallout from last week's collapse of a proposed megamerger between Renault and Fiat Chrysler that would have created one of the world's biggest carmakers. Nissan's hesitance to agree to the deal was a contributing factor in the collapse.

In a statement Monday, Nissan's chief executive, Hiroto Saikawa, said he had received a letter from Renault saying that the French company intended to abstain from a vote on implementing the governance overhaul. The measures were intended to address problems with the company's management that came to light after the November arrest of Carlos Ghosn, former chairman of the two companies and the overall alliance, which also includes Mitsubishi Motors.

"Nissan finds Renault's new stance on this matter most regrettable, as such a stance runs counter to the company's efforts to improve its corporate governance," Saikawa said in the statement.

Concern over the growing rift prompted two top government officials of France and Japan to issue a statement urging both automakers to work together. Bruno Le Maire, the French economy minister, and his Japanese counterpart, Hiroshige Seko, met Monday and said that they "reaffirmed the strong support for the alliance" by both governments, and "encouraged both companies' sincere discussion to enhance competitiveness of the alliance and their shared wish to maintain and reinforce this winning cooperation."

The proposal was drawn up by an independent panel in March and was to be approved by Nissan's shareholders during the company's annual meeting later this month. Renault owns a 43% stake in Nissan, and the package of changes cannot pass without its support. Nissan owns a 15% nonvoting stake in Renault.

The proposed changes would have created independent committees to manage nomination of the company's directors and executive compensation, bringing the company's governance structure into line with standard practice for major international companies in Europe and the United States.

The letter, sent to Saikawa by Renault's chief executive, Jean-Dominique Senard, said that Nissan had not fully considered Renault's views on the overhaul, according to news reports.

In his statement, Saikawa rejected that view, saying that the "transition was discussed thoroughly by Nissan's board and approved by all board members, including Renault's own nominees." Nissan's board includes Senard and two former Renault executives.

Ghosn's arrest threw relations between Nissan and Renault into disarray. The two companies have made efforts to fix their failing relationship, which is critical to their survival in an increasingly competitive auto industry.

Peter Wells, a professor at Cardiff Business School in Britain, said that Nissan and Renault need each other, despite their recent troubles.

The two companies have a long history of cooperation, which would be hard to duplicate with other partners, Wells said. Alliances take years to deliver benefits because of the time it takes to develop new vehicles and begin sharing the costs of production and purchasing.

"I still think Renault-Nissan is a viable concept," Wells said. "They have been together a long time. They have gotten to the point where it's madness to walk away from that. They need to find ways to keep making this work."

One major sticking point has been the shareholding structure of the alliance, whereby Renault exercises significant control over Nissan, despite being the smaller and less successful partner.

The situation has long been an irritant to Nissan, but their ties seemed to have hit a new low in recent weeks as maneuvers around a proposed deal between Renault and Fiat Chrysler exposed deep mistrust between the Japanese and French companies.

The deal, which would have made Renault and Fiat Chrysler the world's third-largest carmaker, was negotiated without Nissan's knowledge, and executives at the company were caught off guard when news of an impending deal appeared.

Nissan declined to endorse the deal, which subsequently fell apart after the French government -- which is a major shareholder in Renault -- insisted that the Japanese company sign off on it.

Business on 06/11/2019

Print Headline: Nissan, Renault rift widens further

ADVERTISEMENT

Sponsor Content

ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT