The rebalancing of their mutual shareholdings by Nissan Motor Co. and Renault SA guarantees increased management flexibility for each automaker but fewer synergies under their partnership -- once seen as the most successful alliance in the industry.
Renault's plan to reduce its stake in Nissan to 15 percent from 43 percent will help the French automaker propel investment for growth with the proceeds, while giving its Japanese partner more autonomy, analysts say.
The two automakers said recently that they will jointly develop six new models for the Indian market and export, their first tie-up plan after outlining the new capital structure.
But the lack of strong leadership after the ouster of Carlos Ghosn, former chairman of the alliance, waning mutual trust and diverging strategies all signal their joint operations are unlikely to be as effective as before, analysts say.
"The 24-year-old alliance was only meaningful in the sense that it helped Nissan survive," said Seiji Sugiura, senior analyst at Tokai Tokyo Research Institute. The partnership "has virtually fallen apart."
Renault rescued Nissan from the brink of bankruptcy in 1999 when it poured in 643 billion yen, or $5.4 billion at the exchange rate of the time, for an initial 37 percent stake. The two automakers have since pursued synergies through common platforms, and joint purchasing and development among other projects.
Ghosn took the helm at Nissan in 2000 and at Renault in 2005, subsequently becoming chairman of the alliance. He said any joint projects had to deliver win-win results for both partners for the alliance to function properly.
The former top executive used to boast that the group was the only surviving alliance, after DaimlerChrysler AG was dissolved and General Motors Co. and Ford Motor Co. also canceled tie-ups with their respective partners, including Suzuki Motor Corp. and Mazda Motor Corp., as part of restructuring. The auto tycoon fled to Lebanon from Japan in 2019 after being arrested for allegedly underreporting remuneration and misusing Nissan's funds.
Renault CEO Luca de Meo said at a joint press conference with Nissan CEO Makoto Uchida in February that he saw "a culture of compromise" in the alliance and the group had sometimes overly stressed harmony, preventing each partner from pursuing optimal solutions.
"My priority is to execute strategies for Renault," De Meo said.
Nissan has long sought to fix the imbalance in the companies' capital tie-up. The Japanese carmaker, with annual global sales of around 4 million vehicles, currently holds a 15 percent stake in its French partner without voting rights, while Renault, with sales of about 2 million vehicles, holds a 43 percent stake in Nissan.
With the departure of Ghosn, Nissan's frustration grew stronger as Renault sought a management integration at the behest of the French government, its top shareholder. The attempt escalated tensions and was rebuked by the Japanese automaker, according to people familiar with the matter.
The alliance needs to sharpen joint operations in the face of a rapid shift in the industry to electric and autonomous vehicles, but it has done little to strengthen synergies under new alliance chairman Jean-Dominique Senard.
Nissan said earlier it will participate in a new EV company to be set up by Renault but plans to take a minority stake of up to 15 percent.
Analysts say it is becoming difficult for carmakers to bolster their competitive edge through economies of scale at a time when vehicles are expected to become more connected, autonomous, shared and electric, known as CASE.
With tech companies such as Sony Group Corp. and Google parent Alphabet Inc. joining the fray, software and artificial intelligence are becoming an integral part of competitive advantage.
Renault has teamed up with Qualcomm Technologies Inc. in the EV business in an effort to respond to the rapid changes in the industry and plans to set up a new company with Chinese auto giant Geely to transfer its gasoline powertrain segment.
Nissan and Renault are pursuing different strategies, with the Japanese automaker pushing hybrid models before its lineup shifts to battery vehicles. Renault, however, is looking to move directly to only offering electric models in the European Union to meet the bloc's regulations that will effectively ban new combustion engine vehicles in 2035.
"It makes no sense for Nissan and Renault to continue cooperation," said Koji Endo, director of equity research at SBI Securities.
Nissan's Uchida said at the joint press conference that the alliance could no longer work "as an extension of the past," though he and De Meo denied the two carmakers were loosening cooperation.
"Nissan now wants to design its growth strategy on its own. That's their true intention," Tokai Tokyo's Sugiura said.