Tokyo: Partners Renault SA and Nissan Motor Co are reportedly in the final stages of talks with Daimler AG to obtain symbolic stakes in each other as they look to share technology amid intensifying competition.
The Nikkei business daily reported on Friday that Nissan, which is Japan’s third-biggest automaker and is held 44.3% by Renault, was set to take a stake of 1 to 2% in Daimler. Negotiators are considering stock swaps or other arrangements that limit the need to raise fresh funds, it said.
All three declined to confirm the reports, which came a day after the FT said Renault and Daimler were close to agreeing a strategic partnership that would include a swap of small stakes.
The paper quoted one unidentified person as saying the “symbolic” stake could be around 3%.
Renault-Nissan chief Carlos Ghosn has said he is open to a third partner for the 11-year-old alliance.
Renault’s board will meet on 6 April to discuss the partnership with Daimler, Le Figaro newspaper reported on Friday, adding that the deal would be announced to shareholders at the carmakers’ annual meetings later in April.
Carmakers are on the hunt to cut costs by building scale and spreading the load of heavy investments in new technologies such as hybrid and electric vehicles over large numbers of cars.
Renault and Daimler, maker of Mercedes cars, have made no secret of being in talks about cooperating to cut costs, pool technology resources and build scale as the crisis-hit industry tries to become more efficient. Both companies have said they were talking with a wide range of makers.
Analysts said a partnership among the three to seek operational synergies could be positive.
“It could set the stage for the expanded supply of electric vehicles or batteries (by Nissan) to Daimler,” JPMorgan Securities analyst Kohei Takahashi wrote in a note.
“However, given the failure of numerous past alliances and mergers to meet their stated targets, we caution against excessive expectations for sharp cost reductions through parts sharing until more details become available,” he added.
Nissan shares rose 0.9% to ¥775 by early afternoon, roughly in ine with Tokyo’s transport sector index.
“I personally think there aren’t a lot of merits for Nissan,” said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.
“Just about the only merit I can see is that it might help make parts procurement less expensive and maybe open some routes into Europe. But overall the gains for Nissan look rather small, and I think the stock price is reflecting this view.”
Analysts also said a deal could fall through, with many citing widespread views that Renault-Nissan’s Ghosn was pushing for the equity deal.
“He’s (Ghosn) not into living together, he’s into getting married. And maybe Daimler is interested in only getting engaged,” said CLSA Asia-Pacific Markets analyst Christopher Richter. He added that operationally there could be advantages on both sides, with Nissan-Renault possibly supplying electric vehicle technology and Daimler providing big diesel engines.
“One nice thing with this alliance is that nobody would be stepping on anybody’s toes,” Richter said.
The auto industry is replete with capital alliances that have floundered or are yielding few or no synergies. Daimler itself has had numerous failures, with Chrysler, Mitsubishi Motors and Hyundai Motor.
Mitsubishi ended months of speculation earlier in March by announcing with France’s PSA Peugeot Citroen that the two had decided to forego an equity tie-up for now.
Small equity holdings within the industry are also not uncommon: Suzuki Motor and Subaru-maker Fuji Heavy Industries hold a few% in each other, while Toyota Motor owns 4% of Yamaha Motor.
Meanwhile, carmakers have also aggressively sought operational tie-ups without an equity relationship.
Sources have said Japan’s Mazda Motor is discussing the possibility of asking Toyota for help in hybrids, though Ford Motor is Mazda’s top shareholder with 11%.
The Nikkei reported on Friday that Mazda planned to introduce a mid-size hybrid vehicle by 2013 based on core components supplied by Toyota.