Nissan plans $663 million investment in Renault’s EV unit; says profit leapt in April-June

by Jul 27, 2023Featured Article, News

Nissan plans to invest 600 million euros ($663 million) in Ampere, Renault’s electric vehicle and software entity in Europe. The two companies also plan to establish more equal cross-shareholdings in the French-Japanese auto alliance, they said Wednesday.

The change will end a disparity that had caused friction between the automakers.

Renault Group and Nissan will retain 15% cross-shareholdings in each other, and Renault will transfer 28.4% of its Nissan shares into a French trust, to keep voting rights of each side at 15% of the total, the companies said in a statement.

“The agreements that have been signed today allow us to step into the next chapter of the alliance,” said Jean-Dominique Senard, chairman of the alliance.

The change is subject to regulatory approval.

When the alliance was set up in 1999, Nissan was on the verge of bankruptcy. The deal initially announced earlier this year also calls for the companies to work together on marketing, vehicles and technology in Latin America, India and Europe.

Nissan also announced financial results, which showed that its net profit more than doubled to 105.5 billion yen in April-June. Sales in most markets were robust, offsetting weakness in China, it said.

Weakness in the Japanese yen also helped Nissan’s bottom line. A weak yen raises the value of Japanese companies’ overseas earnings when they are converted into yen.

Quarterly sales grew 36% from a year earlier to 2.92 trillion yen ($20.8 billion). Nissan lowered its sales forecast for the year through March 2024 to 3.7 million vehicles, down from an earlier projection of 4 million vehicles. That target is still better than the 3.3 million vehicles sold in the previous fiscal year.

The Yokohama-based maker of the Leaf EV and Infiniti luxury brands still expects its profit to hold up thanks to the boost from the weak yen. Nissan is forecasting a 340 billion yen ($2.4 billion) net profit for the fiscal year through March 31, 2024.

It earlier forecast a 310 billion yen profit. It earned nearly 222 billion yen the year before.

The Nissan-Renault alliance has had its ups and downs. Carlos Ghosn, sent in by Renault to lead a turnaround at Nissan, was a star executive until his arrest in Japan in late 2018 on various financial misconduct charges.

The alliance, which includes smaller Japanese automaker Mitsubishi Motor Corp., has sought to put that scandal behind it.

Ghosn now lives in Lebanon, after jumping bail in late 2019. He recently filed a $1 billion lawsuit in Lebanon against Nissan. Lebanon has no extradition treaty with Japan.

A hearing date for the case in Lebanon is set for Sept. 18. Ghosn said half the money he is seeking is for damages, while the other half is for compensation including salary, retirement funds and stock options.

Nissan has declined comment.

Chief Executive Makoto Uchida said reset alliance is moving ahead with its electrification drive.

“With the finalization of the definitive agreements, we have entered the next phase of collaboration with Renault and Mitsubishi Motors in mutually beneficial areas of innovations,” he said.

Uchida acknowledged that the China market is a challenge.

“As the business environment in China is changing drastically and competition is becoming fiercer, it will be difficult to rebuild our business overnight,” he said.

Nissan’s share price fell 1.2% on Wednesday.

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