Nissan to pull out of venture fund with Renault in cost-cutting drive

10 March 2020 - 13:56 By Reuters
A pedestrian walks past the Nissan headquarters in Yokohama, Japan, on Thursday February 13.
A pedestrian walks past the Nissan headquarters in Yokohama, Japan, on Thursday February 13.
Image: Akio Kon/Bloomberg via Getty Images

Nissan Motor Co is likely to pull out from a venture capital fund it runs with alliance partners Renault and Mitsubishi Motors, as part of the Japanese car maker's drive to cut costs and conserve cash, two sources said.

Nissan will formally take a decision on whether to leave the fund, Alliance Ventures, by the end of this month, the two Nissan insiders told Reuters, declining to be identified because the information has not been made public.

The likely move comes after Nissan's junior partner, Mitsubishi Motors Corp, told an alliance meeting last week that it would no longer continue to inject money into the fund, one of the sources said.

The decision to leave the Amsterdam-based fund was all but a done deal, the other source said, adding: "Of course we're out. The house is on fire."

A Nissan spokesperson said it was speculation and declined to comment. A Mitsubishi spokesperson said no decision had been made.

The move comes as Nissan, which has seen its earnings slump, is now facing a downturn in China, its biggest market, due to the impact of the coronavirus outbreak. China sales plunged 80% last month.

It also highlights the extent of the car maker's cost-cutting under new CEO Makoto Uchida, who is under pressure for a quick turnaround.

Alliance Ventures is aimed at finding "learning opportunities" for the alliance through investing in startups. It is supposed get up to $200m (roughly R3.17bn) a year from the three alliance partners - although it never achieves that full amount, the first source said.

It was set up under former alliance head Carlos Ghosn, whose dramatic arrest in Japan culminated in an escape to his childhood home of Lebanon in December. Ghosn faces multiple charges in Japan, including of under-reporting earnings and misappropriation of company funds, all of which he denies.

According to its website, the fund was set up with a $200m (R3.17bn) initial investment and aims for up to $1bn (R15.84bn) by 2023. Portfolio companies include Chinese robo-taxi startup WeRide and Tekion Corp, a cloud-based retail platform for cars.

"It wasn't established by Ghosn as a way to make money It was for those learning opportunities we get from investing in smart startups. But given the tough financial situation we are facing, we are now looking at investment return," said the first source.