Two of the most popular car brands in the world have announced a new joint venture to protect them from market pressures and develop new vehicles.
Automakers Renault and Nissan announced on Monday that they have agreed to further amend their two-decade-old partnership, allowing for a reduction in their cross-shareholdings.
The revised terms lower the required shareholding to 10 per cent from the previous 15 per cent and come just one day before Ivan Espinosa takes over as CEO of the Japanese carmaker.
Nissan has been under significant pressure to boost its competitiveness in the global market, with the changes specifically aimed at supporting Nissan's recovery efforts as the company faces ongoing challenges.
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Renault currently holds 17.05 per cent of Nissan's capital as its largest shareholder. The partnership restructuring represents another significant adjustment to the alliance that was first established over 20 years ago.
Nissan will also be released from its commitment to invest €600million (£501.7million) in Renault's electric vehicle unit Ampere.
The Japanese car brand has also chosen Renault Group to develop and produce a derivative of Twingo, designed by Nissan.
"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.
Nissan CEO Ivan Espinosa added: "Nissan is committed to preserving the value and benefits of our strategic partnership within the Alliance while implementing turnaround measures to enhance efficiencies."
The amendment to the alliance agreement is subject to certain preconditions being fulfilled, with these expected to be met by the end of May.
Nissan has struggled for years with declining sales and has been unable to fully recover from the downfall of former boss Carlos Ghosn.
Ghosn, who was the architect of the Renault-Nissan alliance, was accused of financial misconduct by Tokyo prosecutors, allegations he denies.
Renault CFO Duncan Minto explained the decision "gives Nissan additional flexibility, which would be the possibility for Nissan to sell assets and increase their cash position".
Despite the changes to the partnership, Renault confirmed its forecast of free cash flow of at least €2billion (£1.67billion) in 2025.
This projection comes despite an anticipated impact of approximately €200million (£167million) from acquiring Nissan's stake in the Indian business.
The restructuring is seen as giving Nissan the financial flexibility needed to implement its recovery strategy.
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Renault also announced plans to buy out Nissan's majority stake in their joint Indian business, Renault Nissan Automotive India Private Ltd.
As a result of this change, Nissan will cease manufacturing cars in India, which is the world's third-largest automotive market. The Japanese automaker will instead focus solely on sales and service operations in the country.
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Automakers Renault and Nissan announced on Monday that they have agreed to further amend their two-decade-old partnership, allowing for a reduction in their cross-shareholdings.
The revised terms lower the required shareholding to 10 per cent from the previous 15 per cent and come just one day before Ivan Espinosa takes over as CEO of the Japanese carmaker.
Nissan has been under significant pressure to boost its competitiveness in the global market, with the changes specifically aimed at supporting Nissan's recovery efforts as the company faces ongoing challenges.
Do you have a story you'd like to share? Get in touch by emailing [email protected]
Renault currently holds 17.05 per cent of Nissan's capital as its largest shareholder. The partnership restructuring represents another significant adjustment to the alliance that was first established over 20 years ago.
Nissan will also be released from its commitment to invest €600million (£501.7million) in Renault's electric vehicle unit Ampere.
The Japanese car brand has also chosen Renault Group to develop and produce a derivative of Twingo, designed by Nissan.
"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.
Nissan CEO Ivan Espinosa added: "Nissan is committed to preserving the value and benefits of our strategic partnership within the Alliance while implementing turnaround measures to enhance efficiencies."
The amendment to the alliance agreement is subject to certain preconditions being fulfilled, with these expected to be met by the end of May.
Nissan has struggled for years with declining sales and has been unable to fully recover from the downfall of former boss Carlos Ghosn.
Ghosn, who was the architect of the Renault-Nissan alliance, was accused of financial misconduct by Tokyo prosecutors, allegations he denies.
Renault CFO Duncan Minto explained the decision "gives Nissan additional flexibility, which would be the possibility for Nissan to sell assets and increase their cash position".
Despite the changes to the partnership, Renault confirmed its forecast of free cash flow of at least €2billion (£1.67billion) in 2025.
This projection comes despite an anticipated impact of approximately €200million (£167million) from acquiring Nissan's stake in the Indian business.
The restructuring is seen as giving Nissan the financial flexibility needed to implement its recovery strategy.
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Renault also announced plans to buy out Nissan's majority stake in their joint Indian business, Renault Nissan Automotive India Private Ltd.
As a result of this change, Nissan will cease manufacturing cars in India, which is the world's third-largest automotive market. The Japanese automaker will instead focus solely on sales and service operations in the country.
Find Out More...