Outlook: Gallic empire-building with Nissan

AT FIRST GLANCE, the Fr26bn Renault plans to fork out for a stake in Japan's second-biggest and seriously ailing car company looks like something Papa should very definitely not be contemplating. Nissan has lost the route map after running into the worst Japanese recession since the war, and comes not with a dowry but with pounds 13bn of interest-bearing debt, a legacy of its headlong expansion in the 1980s. If Nicole is looking for a partner, she can surely do better than this.

But then, there is more than a hint of empire-building about the Gallic move. Not so long ago, the French viewed Britain as little more than a "Japanese aircraft carrier" moored off Europe's north-west coast, because it was home to three transplant factories including Nissan's Sunderland plant.

How sweet now to be riding to the rescue as the good ship Nissan lists alarming under the weight of its debts and its flagging range of models. Renault can magnanimously present the deal as an alliance of equals, and the French government, which still owns 44 per cent of the shares, can even donate a soupcon of its residual stake to Nissan as a sign of good faith.

If a means can be found of keeping Nissan's debts away from the Renault balance sheet (and with the French state as co-driver all things are possible) then the industrial logic too looks more compelling. Nissan gives Renault an entree into the US, Japan, and the 4x4 sector, where it has no presence at all, as well as a head start in the development of efficient, environmentally friendly engine technology.

Renault, meanwhile, is an object lesson for Nissan in how to design cars and then plan their introduction. In the Espace and the Scenic, the French have led the way in creating the only two genuinely new market segments of the last 15 years. The two manufacturers' model ranges may compete within Europe but, crucially, there is virtually no overlap in manufacturing capacity, which spares them from the destructive and distracting task of closing plants and laying off workers.