Renault To Acquire Nissan’s Stake In RNAIPL

Renault Nissan India Plant. File Photo.

Changes in shareholding structure and other strategic decisions are aimed at helping Nissan to achieve a faster turnaround

To support Nissan in enhancing its competitiveness and efficiency, Renault Group and Nissan have announced a series of measures. These strategic moves will help reshape the Renault-Nissan alliance and benefit both brands. Changes are at the organization level and will not have any impact on new and existing customers of both Renault and Nissan. Let’s take a look at some of the key initiatives introduced in the Renault-Nissan partnership.

Renault to acquire 100% stake in RNAIPL

In India, the Renault-Nissan alliance is represented by the Renault Nissan Automotive India Private Ltd (RNAIPL). As of now, Nissan has a 51% stake in this entity. As per the new shareholding structure, Renault will acquire a 100% stake in RNAIPL. However, RNAIPL will continue to manufacture cars for Nissan. It includes the new Nissan Magnite.

Nissan will also be launching a new C-segment SUV based on the new Renault Duster (Creta rival) platform and a B-segment 7-seater MPV based on the Renault Triber platform. These will be manufactured by RNAIPL even after 100% stake acquisition by Renault. Nissan will also continue using the RNAIPL facility to manufacture cars for export markets.

Renault too benefits from 100% acquisition of RNAIPL, as it will allow the brand to expand its international operations. RNAIPL operates via its Chennai plant that currently supports models based on the CMF-A and CMF-A+ platforms. The CMF-B platform will be launched next year, which will spawn 4 new models from the Renault-Nissan alliance.

RNAIPL’s Chennai plant has access to a diverse and highly competitive supplier ecosystem, something that has helped launch well-equipped cars at affordable prices. Although the 400,000 annual capacity is currently underutilized, new upcoming models can significantly improve capacity utilization.

Cross-shareholding could reduce to 10%

Another important decision in the new alliance agreement is to provide the freedom to reduce cross-shareholding to 10%. This is optional, but both brands can do it they want. As of now, the cross-shareholding is governed by a lock-up of 15%. However, this change will not impact the 18.66% shareholding in Nissan that Renault Group has via a French trust. In case Renault or Nissan want to reduce the cross-shareholding, the other company or a designated third party will have the right to first offer.

To reduce the burden of capital expenditure, Nissan will no longer be required to invest in Ampere. The latter is Renault’s subsidiary that focuses on electric vehicles. As per the earlier plan, Nissan had to invest around $648.96 million (Rs 5,552 crore) in Ampere. This agreement that was signed in 2023 between Renault Group, Ampere and Nissan will be terminated. It will be a great help for Nissan that is in the process of achieving a turnaround.

RNAIPL to invest 1,850 crores

Acquiring 100% stake in RNAIPL will entail an investment of around €200 million (Rs 1,850 crore). Despite such massive investment, Renault Group is confident of achieving a free cash flow of around € 2 billion (Rs 18,507 crore) in 2025. The company has already identified measures that will help accommodate the additional expenses in 2025.

Statement From Management

“As a long-time partner of Nissan within the Alliance and as its main shareholder, Renault Group 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. This Framework Agreement, beneficial for both parties, is the proof of the agile and efficient mindset of the new Alliance. It also confirms the attractiveness of our products with Twingo as well as our ambition to grow our business on international markets. India is a key automotive market and Renault Group will put in place an efficient industrial footprint and ecosystem,” said Luca de Meo, CEO of Renault Group.

“Nissan is committed to preserving the value and benefits of our strategic partnership within the Alliance while implementing turnaround measures to enhance efficiencies. Our goal is to create a more agile and effective business model that allows us to respond quickly to changing market conditions and conserve cash for future investments. We remain committed to the Indian market, delivering vehicles tailored to local consumer needs while ensuring top-notch sales and service for our existing and future customers. India will remain a hub for our research and development, digital and other knowledge services. Our plans for new SUVs in the India market remain intact, and we will continue our vehicle exports to other markets under the “One Car, One World” business strategy for India,” said Ivan Espinosa, President and CEO of Nissan.

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