Renault, Nissan change alliance rules to open possibility of further share sales

Renault and Nissan agreed to tweak their 25-year partnership, opening the door to further share sales as Nissan continues to work through an extensive efficiency plan.

The deal outlined Monday lowers the minimum required voting stake they must hold in each other to 10%, from 15% currently, with Nissan also able to walk away from a previous commitment to invest up to 600 million euros ($649.7 million) in Renault’s Ampere EV business.

Renault and Nissan’s long-standing alliance, which also includes Mitsubishi, allows the companies to share technological expertise and benefit from common platforms and production.

Renault and Nissan both have a 15% voting stake in each other, while Renault also holds 18.7% in a French trust that it has been selling down in recent years.

However, the Japanese automaker is looking for ways to save cash and has recently outlined plans to slash costs, cut production capacity and eliminate thousands of jobs as it struggles with falling sales, particularly in China, where a price war and a surge of local EV players have hit foreign brands hard. Merger talks with Japanese rival Honda ended without a deal last month.

Renault Chief Executive Luca de Meo said that as Nissan’s main shareholder, the French company has a strong interest in seeing Nissan turnaround its performance as quickly as possible.

“Pragmatism and business-oriented mindset were at the core of our discussions to identify the most effective ways of supporting their recovery plan while developing value-creating business opportunities for Renault Group.”

As part of Monday’s agreement, Renault said it will acquire Nissan’s 51% stake in Renault Nissan Automotive India Private, making it the sole owner of the Indian joint venture that produces Renault and Nissan cars.

Following the deal, the Indian business will continue to produce Nissan models, it said.

The deal will help Renault speed development in India as part of its plans to expand its international business, while Nissan will continue to source vehicles from the divested venture for both the Indian market and for export.

The India deal will impact Renault’s free cash flow by be around 200 million euros this year, but the French carmaker still expects to report full-year group free cash flow of at least 2 billion euros as it has already identified the necessary measures to compensate for the impact.

It also confirmed its 2025 group operating margin guidance, which it said last month would reach at least 7%.

Nissan Chief Executive Ivan Espinosa said the company is aiming to become more agile, allowing it to respond quickly to changing market conditions while at the same time conserving cash for future investments.

“Nissan is committed to preserving the value and benefits of our strategic partnership within the Alliance while implementing turnaround measures to enhance efficiencies.”

Monday’s wide-ranging announcement also included an agreement that will see Renault’s Ampere electric-vehicle brand develop and produce a small car derived from Renault’s Twingo model for Nissan from 2026. The model will be designed by Nissan.

Write to Dominic Chopping at dominic.chopping@wsj.com

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