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Renault-Nissan and FCA: An alliance nipped in the bud

Murali Gopalan | Updated on January 09, 2020 Published on January 09, 2020

Had Ghosn not been arrested, would the merger have happened?

An interesting part of Carlos Ghosn’s press conference on Wednesday was the revelation that talks were on with Fiat Chrysler Automobiles (FCA) for a merger with Renault-Nissan just before his arrest in November 2018.

Had his arrest not happened, it is quite likely that a new marriage would have taken place and catapulted the alliance to a formidable top spot in global rankings.

According to Ghosn, this was nipped in the bud when he was jailed in Tokyo. Eventually, it was Groupe PSA, which makes the Peugeot and Citroen brands, that merged with FCA.

There was clearly a tone of regret in Ghosn’s voice as he spoke about the lost opportunity for Renault-Nissan. The fact remains that even after his arrest, FCA had reached out for merger talks with the alliance but withdrew the offer in barely 10 days. This was due to the French government’s insistence that Renault first focus on rebuilding its ties with Nissan instead of going in for an all-new alliance.

Further, FCA had reached out only to Renault while keeping Nissan out of the merger model. This naturally did not go down too well with the Japanese automaker, which was already bristling over the raw deal that it was apparently getting in the alliance. The French government’s intervention was meant to soothe Nissan’s feelings but the leadership team at Renault was equally sore that it had lost out on an opportunity to forge a new alliance with FCA. This would have been a far more pragmatic option for the future, especially when its own merger with Nissan was not going to happen in a hurry.

FCA has now solemnised a new bond with PSA while Renault is still licking its wounds. With Ghosn now out and keeping an eye on his former employer, every future move to rebuild ties with Nissan will be scrutinised in great detail. How the alliance forges ahead with his shadow looming large will be its biggest challenge.

Japan’s auto industry has been on a consolidation drive for a while now with new partnerships emerging in the form of Toyota-Suzuki, Toyota-Mazda and even Honda-Yamaha in the two-wheeler space. During Ghosn’s tenure, Nissan acquired a controlling stake in Mitsubishi while, more recently, Isuzu picked up UD Trucks from Volvo.

What happens in the event Nissan goes on its own sans Renault? Will a lifeline in the form of another Japanese entity come to its rescue? Will this be Honda or even Toyota? These are premature questions at this point in time but there is no telling what kind of surprises could be thrown up in the future.

There will also be no stopping Ghosn from launching a fresh salvo from time to time.

Published on January 09, 2020
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