Any stake sales could free up much-needed cash for the two automakers, and also mark the first such mutual reduction since Ghosn was removed as chairman.
It also risks upsetting a delicate political balance because the French government owns 15 percent of Renault and has sought to maintain the partnership.
Last week, Senard said changing the shareholder structure “isn’t a priority” and that the focus is on strengthening industrial cooperation. Asked whether Renault could sell down its stake in Nissan, he replied that “it’s probably not the right timing in terms of the price of the shares. It could come someday.”
Makoto Uchida, Nissan’s new CEO appointed amid a year of turmoil, said last month that the partnership would have to benefit all parties and that changes were needed in the pact to benefit the companies’ sales and earnings.
Both companies are facing declining sales and shrinking profits. Nissan, which is conserving cash as it embarks on 12,500 job cuts globally, cut its dividend earlier in the current fiscal year and withdrew its outlook for a 40 yen-per-share payout. That was a blow to Renault, which in 2018 received 784 million euros ($864 million) in dividends from Nissan.
Most automakers will have to spend heavily to keep pace with the shift to electrification and automated driving. While automakers such as Volkswagen Group and Toyota have enough cash on hand to do so, other automakers have been seeking partnerships and raising funds to drive development.
Last week, Citigroup analyst Angus Tweedie wrote in a report that Renault’s cash strain may force it to sell some of its stake in Nissan. Investors do not yet understand “the enormity of the challenges facing Renault, despite the shares trading at the lowest levels since 2012,” said Tweedie.
Renault’s stake in Nissan is worth about 8.6 billion euros ($9.5 billion) at the current share price and a potential disposal would be seen as a “one-off event” that would reduce earnings power and dividend, UBS analysts including David Lesne wrote in a note Monday.
While they do not see a full breakup of the alliance because “it is in the interest of both parties to keep it alive,” the analysts said this would “put at risk Renault’s viability” because Nissan has contributed about 40 percent of Renault earnings and all its dividend.
Katsuyuki Nakai, a credit analyst at S&P Global Ratings, said any changes to the alliance that might disrupt technology sharing or cost savings would be negative for Nissan’s credit.
Investors in the two companies have lost a combined $25 billion since the arrest of Ghosn, who headed the alliance for almost two decades. The 65-year-old executive, who denies the charges against him, escaped trial in Japan at the end of December and made his way to Lebanon, where he is living as a fugitive.
