Economy

French Government Open To Reducing Its Stake In Renault

French Government Open To Reducing Its Stake In Renault

Last month, Fiat-Chrysler stunned the auto world by proposing a merger with Renault that would - together with Nissan and Renault's other Japanese partner, Mitsubishi Motors - create a vehicle giant spanning the globe.

The power imbalance, coupled with issues related to the French government's role in Renault, as well as the fact that Nissan is the larger and more profitable of the two alliance partners, has created unease at Nissan's headquarters and significant friction between the automakers.

But Renault reportedly fears the overhaul will reduce its influence in Nissan, and ties between the partners have already frayed since Ghosn's arrest and scepticism at the Japanese automaker after proposed further integration in the partnership. "As now proposed, this does not seem to be the case".

While Renault understands Nissan's desire to improve its governance, the so-called three board level committees system "should not serve as a tool directed or used against Nissan's largest shareholder", the letter said. "First the alliance (between Nissan and Renault) should be consolidated and then consolidation (more generally) and not one before the other".

The idea of a merger between Renault SA and Fiat Chrysler (FCA) remains a good opportunity, but nothing has changed in terms of the conditions the French government has set, French Finance Minister Bruno Le Maire said on Monday.

Nissan has said the alleged misconduct was the result of governance failings inside the firm, and that the proposed overhauls are necessary to ensure wrongdoing is not possible in the future.

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It's not clear how much of Nissan Renault could relinquish without needing the merger proposal to be restructured.

After Renault released the findings, Nissan issued its own statement backing the conclusions. The French finance minister, who seeks to strike a hard balance between giving autonomy to the companies and pushing a deeper integration between the two, told reporters Sunday that it wasn't "his role" to meet with Nissan's CEO.

In March a Nissan-appointed outside team recommended the formation of the three committees to improve its corporate governance.

The suggestion was dismissed in Tokyo, where Nissan sees France as a cause of tension in the alliance and would prefer a full exit by the government, according to sources.

Nissan's profits are tumbling, partly because of costs related to Ghosn's arrest but also because of sales problems in the North American market.


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