Renault-Nissan alliance woes compounded by pandemic

PARIS/TOKYO -- When the French part of the Renault-Nissan alliance reports its results on Thursday, investors expect confirmation of a harsh reality: automakers that already had weaknesses are having them mercilessly exposed by the pandemic.

All the world's automakers have been in crisis at one time or another in the past few years, but it so happens that the virus hit just as the alliance faced its own reckoning after the messy ouster of its architect Carlos Ghosn.

That leaves Renault and partners Nissan and Mitsubishi vulnerable to what Carlos Tavares, boss of rival PSA Group, described as a "totally Darwinian period" in global vehicle manufacturing.

COVID-19, combined with other headwinds facing the industry, "will winnow out the ones that are agile and frugal, and the ones that aren't," Tavares, whose own company reported a first-half profit this week, told France's Les Echos newspaper.

Interviewed by a newspaper recently in Lebanon where he fled from Japan, Ghosn took his own swipe at his old employers calling their results "pathetic," blaming the poor figures on lack of joint leadership as well as the pandemic.

Analysts' consensus forecast is that Renault will report a 1.8 billion euro ($2.1 billion) operating loss for the first half of 2020, according to Refinitiv data, and a net loss of about 5 billion euros when exceptional costs and the effect of Nissan's losses are factored in.

That will represent a double hit this week for the alliance, after Nissan on Tuesday warned of a record $4.5 billion operating loss this year and its lowest sales in a decade.

Renault said after those results that Nissan's performance will represent a net loss for the French firm of 1.24 billion euros in the second quarter.

The alliance says it has a turnaround plan. It has said it will cut vehicle ranges by a fifth, slash thousands of jobs, and double down on a plan for alliance members to cooperate more closely on car production.

"Renault is among those (automakers) that can remain independent, as long as they continue to reinforce their cooperation," said Denis Schemoul, who is an analyst with IHS Markit.