Nissan is the big loser if FCA and Renault merge

Nissan’s long resistance to its French partner’s request to make the Renault-Nissan alliance “irreversible” came at a high price for the Japanese automaker, which appears to be the real loser in the proposed merger of Fiat Chrysler Automobiles and Renault.

Nissan has complained for years about its unbalanced cross shareholding with Renault. Nissan has a 15 percent stake in the French automaker but no board seats and no voting rights.

If the FCA-Renault merger is approved by Renault shareholders as proposed by FCA, the new entity would continue to own 43.3 percent of Nissan’s shares and voting rights, while the Japanese automaker’s stake in the merged companies would be diluted to just 7.5 percent. Nissan would be invited to nominate a director to the 11-member board of the new combined company, under the plan presented on Monday.

This means the person representing Renault at the next Renault Nissan Mitsubishi Alliance operating board meeting would be the proverbial elephant in the room, as that executive may soon also be part of a powerhouse with combined global sales of 8.7 million vehicles and more than 10 billion euros in operating profit in 2018.

This possible change in the size of Renault comes at a particular painful time for Nissan, which in the fiscal year ended on March saw its global volume dip 4.4 percent to 5.5 million units and its operating profit slump by 45 percent to roughly 2.7 billion euros.

Nissan’s attempt to rebalance the alliance on the Japanese side would become an even more daunting challenge if Renault and FCA merge. The move would also make Renault less worried about the possible dissolution of its fractured 20-year alliance with Nissan.