Renault, Nissan Motor and Mitsubishi Motors have ruled out a merger on Wednesday and doubled down on a strategy to cooperate more closely on auto production in order to save costs and salvage their troubled alliance.
The automakers have been hit hard by the coronavirus pandemic just as they were attempting to rework their partnership following the arrest of its chief architect, Carlos Ghosn, who had been pushing for a merger regardless of stiff resistance from Nissan.
The new plan, which entails slashing the alliance’s vehicle ranges by a fifth, pooling manufacturing by region and capitalizing on joint designs, is supposed to serve as a peace treaty, sources have informed Reuters.
“We don’t need a merger to be efficient,” stated Renault Chairman Jean-Dominique Senard in a joint news conference.
He also stated that present ties with the German automaker Daimler, which owns Mercedes-Benz, could be strengthened and that he hoped to make a declaration in the coming weeks.
Renault and Nissan were one of the weakest global automakers going into the coronavirus crisis and had lacked a clear strategy for using their alliance to emerge from the decline and share the burden of investing in electric vehicles and other technologies.
Competitors such as Peugeot and Fiat Chrysler, have been pushing ahead with strategies to share costs and designs where as the two biggest automakers of the world, Volkswagen and Toyota, already operate as single units.
Renault shares, which have been declined because of the coronavirus crisis, tensions with Nissan and the first loss in a decade in 2019, increased by almost 20% after Wednesday’s announcements.
Daimler shares increased as much as 10% while Nissan closed with a 5.5% increase.
Renault is on its way to receive 5 billion euros ($5.5 billion) in French state aid although the government wants it to keep automanufacturing in France in return.