Investing.com -- Renault SA (OTC:RNLSY), the French automaker, has shown a willingness to allow its alliance partner, Nissan (OTC:NSANY) Motor Co., to engage in merger discussions with Honda Motor Co (NYSE:HMC).
This move comes as Renault (EPA:RENA) seeks strategies to protect itself from the crisis affecting Nissan, according to Bloomberg News. Following the news, shares of Renault rose 6.2%.
Renault, despite holding a 36% stake in Nissan and being its largest shareholder, is not keen on injecting more cash into the Japanese company. Instead, it is encouraging Nissan to explore ways to strengthen its position. Any agreement will require Renault's approval due to its significant shareholding.
While Renault is fundamentally open to any deal that could make Nissan more robust, it will scrutinize any offer made to Nissan to ensure its own interests are protected. The merger discussions between Nissan and Honda are reportedly still in their initial phase.
The automotive industry is currently grappling with several challenges. These include a declining demand for electric vehicles in Europe and increased competition in China from local manufacturers, with BYD Co (SZ:002594). leading the charge.
Furthermore, the ongoing transition from combustion engines, happening at different rates in various markets, is causing disruptions to long-established manufacturing and business models.
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