The planned merger of Nissan and Renault is being shelved as both companies try to work in recovering financial losses brought by the coronavirus pandemic, a Reuters report revealed. The merger was one of the projects headed by former Nissan chairman Carlos Ghosn before he was ousted from the company.
Instead, both Nissan and Renault announced they will channel their focus on cost-cutting and production cutbacks to mitigate losses.
The alliance between the two companies was already met with challenges since the beginning. But at a time when the official merger was about to be formalized, the pandemic happened and caused a significant toll on the entire automotive industry across the globe.
Now that the market is trying to recover from declining sales and a halt in production that lasted for months, Nissan and Renault said they will try a different approach in managing the alliance.
Aside from the two automakers, also affected by the pandemic is their other alliance partner, Mitsubishi. But it appears that Nissan is having more problems considering its financial state even before the pandemic hit.
According to a Bloomberg report, Nissan is planning to cut 20,000 jobs as part of its restructuring plans that will see the company saving $2.8 billion.
It’s unclear if the job cuts are caused by the shelving of the merger, but Nissan is said to be considering a $4.6 billion loan to cushion the impact of the pandemic to the company. Similarly, Renault is looking to borrow $5.4 billion from the French government.
More information about the alliance is expected to be released in the coming weeks as the two companies detail their respective restructuring plans as well as the rest of the 2020 model year.