Nissan Motor is likely to withdraw from a venture capital fund it operates with alliance partners Renault SA and Mitsubishi Motors, as part of the Japanese automaker’s drive to slash costs and save cash, two sources stated.
Nissan will officially take a decision on whether to leave the fund, Alliance Ventures, by the end of this month, the two Nissan insiders informed Reuters, refusing to be identified due to the nature of the information.
The likely move follows Nissan’s junior partner, Mitsubishi Motors, who told an alliance meeting last week that it would no longer continue to pour money into the fund, one of the sources stated.
The decision to quit the Amsterdam-based fund was all but a done deal, the other source stated, saying: “Of course we’re out. The house is on fire.”
A Nissan spokeswoman stated it was speculation and refused to comment. A Mitsubishi spokesman said nothing has been decided as of yet.
The move comes as Nissan – which has seen its revenues decline – is now facing a decline in China, its biggest market, because of the impact of the coronavirus outbreak. China sales declined 80% last month.
It also shows the extent of the Nissan’s cost-cutting under new CEO Makoto Uchida, who is under pressure for a speedy turnaround.
Alliance Ventures is intended at finding “learning opportunities” for the alliance through spending in startups, and is supposed get up to $200 million annually from the three alliance partners, although it never achieves that whole amount, one source said.
It was set up under former alliance head Carlos Ghosn, whose arrest in Japan culminated in an escape to Lebanon in December. Ghosn faces multiple charges in Japan, such as under-reporting earnings and misuse of company funds, all of which he rejects.
“It wasn’t founded by Ghosn as a way to make money. It was for those learning opportunities we get from investing in smart startups,” one source said.
“But given the difficult financial situation we are dealing with, we are looking at investment return.”