Everyone who is involved in the French automotive industry is aware of the surreal knot that is being tied between Renault and Nissan. When you involve Mitsubishi into the mix itself, considering how it is the third lover on the bed, the scenario appears to be a little too good for these companies. A manifestation of this fact lies in how the net profit of these three companies amounts to somewhere around 9.4 billion Euros, making the alliance the fourth strongest on the face of Mother Earth.
Regardless of how lucrative the alliance might have been for the companies in question, the fact remains that results are not, likely, to be same from the perspective of France, as a whole. When you get into the comparison of the companies, you realize that the net income per head generated by the employees of Renault is, almost, half of what is generated by the employees of Nissan. Consequently, the first order of business of the combined group would, obviously, be to stop some of the production lines in France. This will result into the loss of employment for a lot of people, owing to how the automotive production lines are responsible for the bread and butter of a large number of families in France.
The French government has got fifteen percent ownership share in Renault, meaning that it has got the veto power to stop such a catastrophe from happening. If such a scenario is about to happen, therefore, the commoners of France would expect their government to stand up for their rights and interests, rather than looking to uphold some obscure economic principle relating to international trade. The French government has got an influence on the alliance, which is the reason why it has to ensure that things work out in favor of France!
Video link: https://www.youtube.com/watch?v=JC-mkuqidOg
Nissan has recently been involved in talks with the French government for the purchase of stakes in Renault, as part of the merger prelude. For those who don’t already know, Renault and Nissan have been in alliance for quite some time now – since 1999 to be exact, with Mitsubishi joining in on the fun recently as well. As a part of the alliance, Renault holds 43.4 % of the shares in Nissan, whereas Nissan holds 15 % of the stake in Renault. Recently, the alliance proposed a plan to the French government according to which not only would Paris give up its controlling at Renault but the company will relinquish its control over Nissan as well.
The proposition appears to be preposterous, especially when you consider the Tokyo market rules, according to which Renault will lose its entire stake in Nissan, as the deal will see Nissan’s stake in Renault exceed the mark of 25 %. This should be seen as nothing short of a disgrace for a country like France, which has always been one of the market leaders in this industry.
On top of that, the dilution of stake could be a risky game for the Macron government, owing to how they are still facing backlash for letting the TGV train makers fall into foreign hands. However, such a merger will have far more serious consequences, owing to how it will not only affect the country’s technological centers but hit the industrial jobs and the revenues that are collected from tax as well. What this means is that not only will the French lose out on their jobs but will need to contribute more to the state, in the name of tax as well.
Regardless of how lucrative the deal offered by Nissan might be, the French government needs to learn from its mistakes in the past and keep the companies that the French created with their blood and sweat from falling into foreign hands. If not, then it is the commoners of France who will suffer…again!