AN ICONIC carmaker “on the brink of collapse” has agreed a £500million deal with a rival allowing a major change in a bid to stay afloat.
Ailing Japanese automaker Nissan has renewed its two-decade-long partnership with French firm Renault as part of a restructure.
It will allow for a reduction in both company's cross-shareholdings, in a move aimed at helping Nissan‘s recovery.
The change in terms sees the required shareholding being lowered to 10% from 15% previously.
Renault CFO Duncan Minto told journalists on Monday: “The decision today gives Nissan additional flexibility, which would be the possibility for Nissan to sell assets and increase their cash position.”
The deal came a day before Ivan Espinosa took over as Nissan's CEO, which is under pressure to significantly boost its competitiveness.
Chairman and former CEO Akio Toyoda, whose grandfather founded the firm, spoke last month about his disappointment over a failed “mega-merger” with Honda.
Nissan will also be released from its commitment to invest in Renault's electric vehicle unit Ampere, for which it had pledged 600 million euros (£502 million).
“As a long-time partner of Nissan within the alliance and as its main shareholder, Renault Group has a strong interest in seeing Nissan turn around its performance as quickly as possible,” said Renault CEO Luca de Meo in a statement.
Renault also announced its intention to buy out Nissan's majority stake in their joint Indian business, Renault Nissan Automotive India Private Ltd (RNAIPL), with the expected completion of the deal by the end of the first half of this year.
As a result, Nissan will cease making cars in the world's third-largest auto market and will focus on sales and service.
Renault will continue to make cars for Nissan at the venture's factory in India's southern state of Tamil Nadu.
The plant can produce over 400,000 cars a year but is only running at about a third of that capacity, industry data shows.
“Nissan is committed to preserving the value and benefits of our strategic partnership within the Alliance while implementing turnaround measures to enhance efficiencies,” said incoming CEO Espinosa in the statement.
Espinosa, previously Nissan's chief planning officer, was appointed in early March to succeed Makoto Uchida, after deteriorating results at Japan‘s third-largest automaker and unsuccessful negotiations for a merger with Honda.
Nissan, in which Renault is the largest shareholder with 17.05% of the capital held directly, has been plagued for years by declining sales.
It has struggled to recover from the downfall of former boss Carlos Ghosn, architect of the Renault-Nissan alliance, who was accused by the Tokyo prosecutor's office of financial misconduct, which he denies.
Renault confirmed its forecast of free cash flow of at least 2 billion euros in 2025, despite an impact of approximately 200 million euros from acquiring Nissan's stake in the Indian business.
“The decision today gives Nissan additional flexibility, which would be the possibility for Nissan to sell assets and increase their cash position,” Renault CFO Duncan Minto told journalists. He said having such ability would help Nissan restructure.
The amendment to the alliance agreement, which in 2023 established a rebalancing of cross-shareholdings, and the termination of Nissan's investment agreement in Ampere, are subject to certain preconditions being fulfilled, expected by the end of May, the companies said.
Iconic car brand ‘on brink of collapse’ as ‘bosses warn company has just 12 months to survive’
ONE of the world's largest car manufacturers reportedly could go under within 12 months if it doesn't receive support.
The firm is looking to sure up its future by growing a partnership with its former rival after the reported collapse of a three-way alliance.
Nissan was one-third of a strategic deal with Mitsubishi and Renault to share financial backing and expand all their markets in Europe, Japan and the US.
The agreement dates back to 1999 but now could be on the brink of collapse.
A report from the Financial Times cites two anonymous “senior officials” at the firm suggesting that Renault is looking to reduce its financial stake in the Japanese carmaker.
The withdrawal of funding means, according to the same sources, that Nissan could require support from the Japanese or US governments within the next year just in order to stay afloat.
One of the officials said: “We have 12 or 14 months to survive.
“This is going to be tough.
“And in the end, we need Japan and the US to be generating cash.”
Nissan has already cut 9,000 jobs across its global operation, while its CEO Makoto Uchida took a 50% pay cut in an economy drive.
The business is working through an emergency recovery plan, which will see it cut output by 20% and slash around £2bn in costs.
Its struggles have partly been blamed on the lack of a strong hybrid lineup, which has helped rivals like Toyota and Honda through the global collapse in EV sales.
In a press conference earlier this month, Mr Uchida said: “This has been a lesson learned and we have not been able to keep up with the times.
“We weren’t able to foresee that hybrid electric vehicles and plug-in hybrids would be so popular.”
