A possible merger of longtime partners, Nissan and Renault, could create dominance in the automotive sector globally by three major players, with competition being fierce, Bloomberg said.
French and Japanese automakers and Mitsubishi's third-party partner together produce 10.8 million vehicles a year, double the world's supply of US rival Ford. If a merger agreement is concluded between Renault and Nissan, the new company will be the second largest in the world. The German automaker Volkswagen will remain the first and third position will be occupied by the Japanese company Toyota.
Company size has always been a factor in the industry. Automakers increase their costs to invest in the development of self-propelled cars and electric cars. Meanwhile, shared travel companies like Uber take customers from automotive companies and the business tensions have a negative impact on the industry.
Renault president Jean-Dominique Senard, who took office since January in the place of Carlos Gonzalez, has resurrected the idea of merging the two companies, say negotiating experts who wished to remain anonymous.
Nissan and the Japanese government are hindering Renault's efforts to boost merger talks, the Financial Times said. Relations between partners are strained because of Gon's arrest in Japan.
"For the mass producers, size is everything, the three countries want to continue their cooperation, but everything has to be reconsidered after Gon's arrest," explains financial analyst Bankhaus Metzler Jürgen Piper of Frankfurt.
Senard's proposal provides for equal ownership and management. That would be beneficial to the Japanese automaker, which was rescued by the bankruptcy of Renault almost 20 years ago.
The struggle for unification has a desperate need for reform for several years. Nissan currently generates more sales than Renault, but does not have the right to vote in partner's decision-making. Unbalanced relations between the two countries have created tensions in the past. The problem deepened in 2015, when the French government, which owns 15% of Renault, thwarted Nissan's plan to vote.
What the analysts say and what the risks are following the analysis on the Bloomberg TV Bulgaria website!