Fitch Ratings today (11 July) said that Nissan Motor could be negatively influenced if the proposal to include General Motors in the current Renault-Nissan alliance becomes a reality.
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Analysts at the rating agency said this was despite noted positive synergies from the three-way association.
As reported earlier this week in just-auto, the board of GM has agreed to “engage in exploratory discussions” with Renault and Nissan regarding GM’s potential participation in an alliance among the three companies. Whether or not the deal proceeds is now largely dependent on a decision by GM’s management.
In a statement Fitch said: “Given the necessity of shared strategic goals for all parties involved in a successful alliance, as shown in the case of the Renault-Nissan alliance so far, Fitch thinks the new alliance is unlikely to go ahead without GM management’s favourable acceptance of the proposal.
“The agency views that there is a high possibility that the proposed new alliance, if realised, will eventually result in equity investment and managerial involvement in GM by Renault and Nissan under the leadership of their CEO, Carlos Ghosn.”
Fitch pointed out that the major areas of benefit for the three companies springing from the new alliance will be cost reductions through the widening of joint procurement projects, sharing of research and development achievements, having common platforms for vehicles, and exchanging production facilities for the better usage of their production capacities.
“On the other hand, Fitch also underscores the probability that there will be negative aspects to the deal,” the statement continued.
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By GlobalData“Apart from channelling financial investments into GM, both Renault and Nissan may also have to give additional financial support, if necessary. As many of the problems GM currently has are deeply rooted and cannot be resolved in a short period of time, it is expected that a considerable amount of Renault and Nissan’s management resources will be spent revitalising GM’s operations for a long time, if they are involved in GM’s management.”
Fitch said that it believes Nissan currently has weaker sales than expected as a result of its low level of new model introductions.
“In addition, Nissan has a lot to do to achieve its mid-term goals, including successful and continuous new model introductions, and research and development to prepare for keener competition, especially against its stronger Japanese rivals. Fitch believes the new partnership may hinder the company’s efforts to achieve its management goals.”
