NISSAN MAY BE BUILDING WAR CHEST
Carmaker seen seeking financial flexibility amid tensions with French partner Renault
NISSAN Motor Co plans to repatriate more than US$1 billion (RM4.18 billion) in cash from its Chinese subsidiary, according to people familiar with the matter, a sign the Japanese carmaker is building its financial firepower amid tensions with French partner Renault SA.
The transfer of 7.5 billion yuan (RM4.56 billion) of the Chinese unit’s earnings could be completed by the end of next month, said one of the people.
Typically Nissan, which has made cars with China’s Dongfeng Motor Corp since 2003, reinvests the profit to avoid taxes, said one of the people. Filling its coffers at home would give Yokohamabased Nissan financial flexibility in case the three-way alliance with Renault and Mitsubishi Motors Corp goes sour.
“Nissan is not planning or undertaking any transfers except those that would ordinarily be made in the course of business,” said the company in a statement, declining to comment specifically on whether it was moving money from China. “This notion that this transfer is unusual is baseless,” it said.
Tensions in the FrancoJapanese partnership have surfaced since the November 19 arrest of Carlos Ghosn, whose legal limbo has left the alliance without the leader who held the two sides together for two decades. While the carmakers have expressed commitment to the project behind the scenes there are suspicions.
The Chinese unit was told in June that Nissan planned to move the funds as a profit distribution, though no schedule was given at the time, said one of the people. The transaction would cost about US$100 million in taxes, said the people.
Renault executives have quietly seethed over any notion that Nissan may use Ghosn’s exit as a way to alter the balance of power in the alliance, in which Renault has a 43 per cent voting stake in Nissan.
In turn, Nissan owns 15 per cent of Renault, with no voting rights. Any attempt by Nissan to unilaterally buy a stake in its partner would be akin to war, a French government official had said.
“There is no intention whatsoever to use transfers for the purchase of Renault shares,” said Nissan.
Shares of Nissan advanced 1.4 per cent in Tokyo and have lost 6.8 per cent since Ghosn’s arrest. Renault has declined 13 per cent over that span.
Nissan has long been irked by what it sees as French government meddling in the alliance and is seeking to redress imbalances in the partnership, people familiar with the matter have said.
Tensions peaked in 2015 when France, under the leadership of then-economy minister Emmanuel Macron, increased its stake in Renault without informing Ghosn.