French automotive giant Renault has announced it will record an extraordinary loss of approximately $11 billion on its stake in Nissan Motor for the first half of the year. This significant write-down reflects the declining value of Renault’s long-standing investment in the Japanese automaker, which continues to struggle with slumping sales and an ageing product lineup.
The move marks a further loosening of the two-decade-old partnership between Renault and Nissan. Over recent years, Renault has gradually reduced its stake in Nissan and shifted its focus to select manufacturing collaborations rather than broad-based integration. Currently, Renault holds a 35.7% stake in Nissan, with 17.05% owned directly and the remainder held through a trust.
According to Reuters, Renault clarified that, moving forward, any changes in the value of its Nissan holding will be recognised directly in equity and assessed based on Nissan’s share price. This accounting shift means future fluctuations will not impact Renault’s net income or the dividends it pays to shareholders. The company also emphasised that ongoing operational projects and collaborations with Nissan will remain unchanged despite the financial adjustment.
Nissan’s struggles and market impact
The financial woes at Nissan have intensified in recent years, particularly as the company has lagged behind competitors in the transition to electric vehicles. The Japanese automaker has never fully recovered from the turmoil that followed the 2018 ousting and arrest of former chairman Carlos Ghosn. Facing declining sales and an outdated vehicle lineup, Nissan posted a net annual loss of $4.5 billion in the financial year ending March and has refrained from issuing a forecast for the current year. To address its cash flow challenges, Nissan has reportedly asked some suppliers to defer payments, seeking to free up short-term funds.
Market reaction to the news was swift, with Renault’s shares slipping 1% and Nissan’s falling 2.4%. Despite the one-off loss, Renault, which is currently searching for a new CEO, affirmed that its current financial guidance for the year remains unchanged and that it will report first-half results on July 31.
