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Nissan and Renault shelve merger plans, will repair their alliance

Renault and Nissan have shelved plans to push towards the full merger former leader Carlos Ghosn craved and will instead fix their troubled alliance to try to recover from the coronavirus pandemic, five senior sources told Reuters. Nissan has long resisted Renault's proposals for a full-blown merger as executives felt the French carmaker was not paying its fair share for the engineering work it did in Japan, sowing discord that some feared could wreck the partnership. Now, with carmakers around the world reeling from the pandemic, the partners are planning to overhaul an alliance that largely failed to convert its global scale into a competitive advantage beyond the joint procurement of parts. Both struggling carmakers are set to announce mid-term restructuring plans this week that will serve as a peace treaty designed to resolve the long-standing tensions, five people familiar with the overhaul told Reuters. "After the rain, the earth hardens," said one senior Nissan source, citing a popular Japanese proverb that means relationships become stronger after a period of strife. All five sources within the alliance, which also includes Mitsubishi, declined to be named because they are not authorized to speak with media. Nissan and Renault are each planning substantial restructuring and cost cuts that could affect tens of thousands of jobs, with the Japanese company to announce its measures on May 28 and its French partner likely to follow the next day. Before that, Mitsubishi, Nissan and Renault are holding a joint news conference on May 27 during which they are expected to outline the philosophy behind their new "leader-follower" approach to the alliance. The sources said the companies were unlikely to disclose many details at the events this week of how the new approach will be used to share costs as the companies were still working on specific projects. However, the crisis at both carmakers has accelerated efforts to resolve the disagreements that have stymied collaboration and cost-sharing in technology and product development for five years, the sources said. Mitsubishi, Nissan and Renault all declined to comment officially about alliance plans. 'Leader-follower' The alliance has steadily ramped up output over the years, delivering over 10 million vehicles for the first time in 2017, the first full year after Mitsubishi joined the partnership.

The next steps automakers could take after sales drop again in April

DETROIT (Reuters) - Major automakers on Tuesday posted declines in U.S. new vehicle sales for April in a sign the long boom cycle that lifted the American auto industry to record sales last year is losing steam, sending carmaker stocks down. The drop in sales versus April 2016 came on the heels of a disappointing March, which automakers had shrugged off as just a bad month. But two straight weak months has heightened Wall Street worries the cyclical industry is on a downward swing after a nearly uninterrupted boom since the Great Recession's end in 2010. Auto sales were a drag on U.S. first-quarter gross domestic product, with the economy growing at an annual rate of just 0.7 percent according to an advance estimate published by the Commerce Department last Friday. Excluding the auto sector the GDP growth rate would have been 1.2 percent. Industry consultant Autodata put the industry's seasonally adjusted annualized rate of sales at 16.88 million units for April, below the average of 17.2 million units predicted by analysts polled by Reuters. General Motors Co shares fell 2.9 percent while Ford Motor Co slid 4.3 percent and Fiat Chrysler Automobiles NV's U.S.-traded shares tumbled 4.2 percent. The U.S. auto industry faces multiple challenges. Sales are slipping and vehicle inventory levels have risen even as carmakers have hiked discounts to lure customers. A flood of used vehicles from the boom cycle are increasingly competing with new cars. The question for automakers: How much and for how long to curtail production this summer, which will result in worker layoffs? To bring down stocks of unsold vehicles, the Detroit automakers need to cut production, and offer more discounts without creating "an incentives war," said Mark Wakefield, head of the North American automotive practice for AlixPartners in Southfield, Michigan. "We see multiple weeks (of production) being taken out on the car side," he said, "and some softness on the truck side." Rival automakers will be watching each other to see if one is cutting prices to gain market share from another, he said, instead of just clearing inventory. INVESTORS DIGEST BAD NEWS Just last week GM reported a record first-quarter profit, but that had almost zero impact on the automaker's stock. The iconic carmaker, whose own interest was once conflated with that of America's, has slipped behind luxury carmaker Tesla Inc in terms of valuation.

Nissan's Kelly examined at Japanese hospital after securing bail

TOKYO — Nissan director Greg Kelly was being examined in a hospital on Wednesday, a source said, a day after he was released on bail from a Tokyo jail where his former boss Carlos Ghosn is still being detained. Kelly, an American who was released late on Christmas Day after more than a month in detention, has been charged with conspiring to under-report Ghosn's income. He posted bail of 70 million yen ($640,000). Their Nov. 19 arrests jolted the global car industry and has strained Nissan's alliance with French car maker Renault SA. Nissan's board last month fired Ghosn as chairman and Kelly as representative director, although both men technically still remain board members who can only be removed by shareholders. Kelly suffers from spinal stenosis, causing numbness, tingling and shooting pain in his extremities, according to a video message last week from his wife, Dee Kelly, appealing for his release. The condition compresses or pinches the spinal cord. Those symptoms worsened during his five weeks in the Tokyo Detention Center, his wife said, citing Kelly's lawyer. Kelly was scheduled to have surgery on Dec. 7 in Nashville, Tennessee, but flew to Japan last month after being told that he was needed in person at a board meeting, Dee Kelly said in the video. Kelly was arrested soon after his arrival. Under the conditions of his bail, Kelly is barred from traveling overseas and his residence must be restricted to a designated place, the Tokyo District Court said. Lawyers say that travel exceptions can be made on a case-by-case basis. Kelly walked out of the detention center around 10:45 pm (1345 GMT) Thursday night wearing a light-colored jacket and was whisked away in a black taxi. Japanese media showed footage of Kelly entering a hospital around midnight. After his release from detention, Kelly issued a statement through his lawyer saying he had not falsified any documents and looked forward to restoring his honor in court. "I believe my innocence will be revealed in the trial," he said. Kelly also said in the statement he wanted to see a doctor immediately and get the appropriate treatment or operation originally scheduled for early December. The office of his lawyer, Yoichi Kitamura, did not respond to requests for comment. Ghosn was re-arrested on Friday based on suspicions that around October 2008 he shifted personal trades to Nissan to make it responsible for 1.85 billion yen ($16.6 million) in appraisal losses, prosecutors said.