Renault & Nissan to merge and create a new car manufacturing entity

Nissan Motor Corporation, a reputed Japanese car manufacturer, and Renault SA, a French automaker, are discussing about a possible merger to create a new firm for competing against its business rivals such as Volkswagen and Toyota. With the rising global trend towards the use of electric & ride-sharing cars, both the firms are aiming to expand their business while strengthening their two-decade-long business relationship.For the record, Renault currently holds a 43% stake in Nissan, while Nissan has nearly 15% of Renault’s shares. The joint organization is expected to amass a huge chunk of the automotive industry share and gain a competitive edge in the era of autonomous driving, car-sharing, and energy cars through proper allocation & utilization of the resources. Both the automotive giants are eager to enter into a contract in which the stakeholders of Renault will be provided with the share of the newly merged firm. The shareholders of Nissan will also receive stocks in the combined entity in lieu of their assets.

It is forecast that the headquarters of the merged entity will be based in both the countries. However, the deal is expected to be finalized only after it has been approved by the government of France as well as the Japanese authorities. In February this year, Carlos Ghosn, the chairman of Renault SA, announced that both the renowned automobile manufacturers will draft a plan to strengthen their alliance and make it irreversible.

Both the firms are looking forward towards increasing their collaborations to 10 billion euros by 2022 from 2016. Reliable sources cite that Mitsubishi Corporation may also participate in the alliance by joining its shared-parts unit. As per the forecast, the Nissan-Renault alliance is likely to sell nearly 14 million cars by 2022 as compared to 10.6 million car units in 2017.