Nissan Considers Stake Reduction in Renault to Fund New Investments

Nissan Motor Co., Ltd. NSANY plans to reduce its ownership stake in its long-standing French partner Renault SA RNLSY to allocate more resources toward the development of new vehicles. Per Nikkei, Nissan’s partnership with Renault would remain strong, even as they lessen their financial and governance ties.

The two automakers, partners for more than 20 years, have updated their alliance agreement, which allows them to decrease their mutual shareholdings from 15% to 10% to grant each company greater operational flexibility. Per the agreement, any stake sale must be coordinated with the other party and include a right of first refusal. Per Reuters, if Nissan sells a 5% stake in Renault, it could raise around ¥100 billion at the current market value. Nissan currently holds a 15% share in Renault, based on LSEG data.

Renault, on the other hand, has been gradually reducing its stake in Nissan, held in a French trust, since 2023, following a restructuring of their alliance to ensure a more balanced equity relationship. Per Nissan, if it proceeds with a share sale, the capital raised would primarily support new product development. However, no final decision has been made yet.

Since taking over as CEO in April, Ivan Espinosa has introduced a strategic plan titled “Re:Nissan,” which outlines a goal to cut 20,000 jobs and reduce the company’s global assembly plants from 17 to 10 by March 2028. This restructuring comes in the wake of a net loss of ¥670.8 billion for the fiscal year ending March 2025.

Nissan is also planning to raise up to ¥1 trillion through a mix of corporate bond issuance and asset sales to meet upcoming bond repayments and cover restructuring costs.

NSANY’s Zacks Rank & Key Picks

Nissan carries a Zacks Rank #3 (Hold) at present.

Some better-ranked stocks in the auto space are CarGurus, Inc. CARG and Michelin MGDDY, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here. 

The Zacks Consensus Estimate for CARG’s 2025 sales and earnings implies year-over-year growth of 4.96% and 25%, respectively. EPS estimates for 2025 and 2026 have improved 30 cents and 44 cents, respectively, in the past 60 days.

The Zacks Consensus Estimate for MGDDY’s 2025 sales and earnings implies year-over-year growth of 1.69% and 37.76%, respectively. EPS estimates for 2025 have improved by a penny in the past 30 days. EPS estimates for 2026 have improved by 3 cents in the past seven days.

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This article originally published on Zacks Investment Research (zacks.com).

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