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Renault-Nissan alliance faces challenges

03-01-2011 09:40 BJT

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Two of the world's biggest auto makers - Renault and Nissan - have been partners for years. And their cooperation is often seen as a success in the industry. But investors aren't so impressed by the Nissan CEO's plan for the next 6 years. And analysts say the cooperation is facing challenges.

In an industry littered with the wreckage of failed tie-ups, the Renault-Nissan alliance is viewed as a success story.

Lately though, Renault investors have been less than thrilled about the partnership. After Ghosn unveiled his new six-year plan on Feb 10, investors sent Renault shares 13 percent lower towards the end of last week.

The reaction surprised Ghosn, who promised a review of the alliance.

He acknowledges that after a relatively problem-free 12 year relationship between Nissan and Renault, new challenges lie ahead.

Carlos Ghosn, CEO of Nissan Motors said "My biggest challenge is modernizing, adapting the alliance, and at the same time keeping the strength of the alliance. Because everytime you're making changes, you're taking some risks, okay. So what I would like is to adapt the alliance to the new reality of the market, make the change which are necessary but keep what made the alliance so, in a certain way, resourceful and so strong in front of adversity. Because for the last 11 years, never heard about conflict or problem at the level of the alliance. We want to keep this spirit. That's my biggest challenge."

The heart of the discontent lies with the 43 percent that Renault holds in Nissan worth about $20 billion. The value exceeds Renault's market cap of $18 billion, and shareholders want the money freed up and put to better use.

Renault's core auto business remains unprofitable.

In contrast, Nissan holds just 15 percent in the French automaker, and is making money again, thanks to aggressive moves in China.

Ghosn ruled out a merger, stressing that his dual CEO role has worked well for shareholders

Carlos Ghosn said "At the end of the day, the bottom line is when your mandate finish, you go in front of the shareholders, if they want you to continue that means they have a good evaluation of what you're doing. That's the bottom line."

Ghosn's four-year mandate as Renault's CEO was renewed last year, taking his term to 2014.

His two-year term as head of Nissan is up for renewal this June. Ghosn has headed the Japanese automaker for nearly 10 years, and hints he would like to continue at Nissan as well.

Editor:Xiong Qu |Source: CNTV.CN

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