The proposed merger between Honda and Nissan has taken an unexpected turn, with reports emerging that talks, initially called off, could be revived. In a surprising move, Honda is reportedly leveraging the situation to push for the resignation of Nissan's president, Makoto Uchida, before any further negotiations can proceed. At the same time, Renault is exploring options to sell its 36% stake in Nissan while deepening its ties with Geely—seen by many as a potential alternative to its long-standing relationship with Nissan.
Despite these shifts, two key elements remain unchanged: Nissan's acquisition remains a top priority for Japanese automakers, with the Japanese government continuing to play a crucial behind-the-scenes role, and any sale of Renault's stake in Nissan is still contingent on approval from the Japanese automaker.
Challenges of cross-border alliances
Renault hopes to generate funds by offloading its shares in Nissan, a move that could also support its transition to electric vehicles (EVs). Recently, Renault has deepened its partnership with Chinese private automaker Geely, raising questions in the market. As the two companies grow closer, observers are wondering if this partnership could serve as an alternative to the Renault-Nissan relationship.
Industry sources say that the cultural challenges of cross-border automaker alliances are the most significant, with the major alliances being Stellantis, which includes American, Italian, and French automakers, and the Renault-Nissan-Mitsubishi (RNM) Alliance. Japanese automakers, which dominated the era of fuel-powered cars, continue to perform strongly, even with new entrants like Tesla and Chinese car manufacturers. Toyota remains the global sales leader, while Honda and other Japanese brands continue to perform well.
Japan's automotive industry, a source of national pride, has long been resistant to external influence. Despite Renault's membership in the Renault-Nissan-Mitsubishi (RNM) alliance, the departure of Carlos Ghosn—the charismatic architect of the partnership—has caused friction among the companies. With Ghosn's exit, communication within the alliance has become strained, and Renault, often viewed as an outsider, appears increasingly eager to distance itself from the group.
Renault-Geely partnership deepens
In recent years, Renault and Geely have significantly deepened their global partnership, marking a notable shift in the automotive landscape. Reports suggest that the two companies have struck a deal to produce and market EVs and low-carbon vehicles in Brazil. As part of the agreement, Geely will take a minority stake in Renault Brazil, while Renault will handle production and sales channels in the region.
Brazil, which represents 44% of South America's vehicle market, provides an ideal launchpad for Geely to penetrate the South American market. Meanwhile, Renault stands to benefit from revitalized operations, bolstered production capacity, and reduced dependency on the increasingly saturated European market.
By mid-2024, Renault is expected to begin manufacturing vehicles for Geely in Brazil while also serving as the company's local distributor. This new chapter builds on their earlier collaboration, including the creation of the Horse Powertrain joint venture focused on powertrain systems, which saw Saudi Aramco join the partnership, further solidifying the alliance.
Geely's involvement with Renault dates back to 2022, when it acquired a 34% stake in Renault Korea Motors. The two companies are already collaborating on the production of fuel-powered and hybrid vehicles, strengthening their joint footprint in the global automotive market.
Some industry observers question whether this expanded collaboration will eventually lead to a global alliance or even a merger. However, the growing partnership undeniably strengthens the global competitiveness of both companies, and it may lay the groundwork for future shifts in the global automotive industry after Honda and Nissan potentially team up.
Geely and BYD stand as China's two largest private automakers, each carving out distinct paths in the global market. While BYD has surged ahead in recent years, dominating the new energy vehicle sector with rapid growth, Geely's long-term international strategy has also drawn significant attention. The company made headlines with its acquisition of full ownership of Volvo and has further strengthened its global presence through a major stake in Mercedes-Benz, held by its founder, Eric Li. Geely has been considered a formidable player on the world stage.
