Nissan Motor Co. is opposing renewed efforts by alliance partner Renault SA to merge under a holding company because such a structure won’t help turn it around, according to a source with knowledge of the discussions.

Talks have been ongoing since Renault Chairman Jean-Dominique Senard first made an informal proposal to Nissan Chief Executive Officer Hiroto Saikawa in April, the source said, asking not to be identified because the discussions aren’t public.

Nissan rebuffed the idea then and has continued to oppose it, the source said.

News of the talks comes as Nissan was set to report on Tuesday its lowest annual operating profit in a decade, hurt by slumping U.S. sales, aging models and a product cycle that’s out of sync. The merger proposal came after the most tumultuous few months in the companies’ two-decade partnership, which was shaken by the shock arrest of the alliance’s chief architect and former chairman, Carlos Ghosn.

Nissan declined to comment on the discussions. Representatives for Renault didn’t immediately respond to requests for comment.

A merger under a holding company won’t help solve Nissan’s current operational issues, such as high fixed-costs, unprofitable models and flawed Datsun and Infiniti brand strategies, the source said, adding that a new structure will cause delays in addressing these issues because of logistical and regulatory hurdles.

Combining the companies under a single entity won’t add benefits of scale because they already share purchasing and development costs, the source added.

TBS reported earlier Monday that Renault had made a formal offer to merge with Nissan under a holding company structure, citing unidentified people. The broadcaster didn’t elaborate on what it meant by formal, or when the proposal was made. The Japanese government has also spurned efforts by Renault to engage in merger talks, according to The Financial Times.

No formal proposal has been made to Nissan, according to a source close to Renault. The Japanese carmaker hasn’t received a formal merger proposal from Renault, Nissan executive Hitoshi Kawaguchi said.

Although the French automaker agreed in 2015 not to interfere in its decision-making, Nissan’s financial weakness could give Renault an opening to push harder for a merger. The combination would give Renault and Nissan heft as the industry is going through a radical shift toward electric and self-driving vehicles.

The proposal revived by Senard calls for a holding-company structure, which would provide for equal ownership and board representation for Renault and Nissan, people familiar with the situation have said. While the aim of such a structure is to gain Nissan’s support, Saikawa reportedly rejected a request last month by Senard to reconsider a merger.

The French and Japanese manufacturers, along with third partner Mitsubishi Motors Corp., make 10.8 million cars each year — nearly double Ford Motor Co.’s global deliveries. The alliance — currently held together by a series of cross-shareholdings — would be second only to Germany’s Volkswagen AG, with Toyota Motor Corp. a close third.

Auto manufacturers are grappling with investments needed to keep pace in the race to develop self-driving and electric vehicles, while ride-sharing services such as Uber Technologies Inc. leech away customers and trade tensions roil markets.

Nissan last month warned investors of bad times ahead as it cut preliminary profit for the year ended March to ¥318 billion, a 30 percent decline from the previous guidance, which itself had been lowered. That would mark the first time the Japanese carmaker earned less than Renault in a decade.

Nissan may also announce that it’s paring its midterm revenue targets, according to a source familiar with the matter who didn’t want to be identified discussing company business. The carmaker will lower its fiscal 2022 revenue target to about ¥14 trillion from the existing target of ¥16.5 trillion and cut its operating margin target to about 6 percent from 8 percent, the source said, confirming an earlier report in the Asahi Shimbun. Nissan declined to comment on the Asahi report.

Renault is treading carefully in its relations with Nissan. Their cross-shareholding is governed by an agreement known as Rama, which was last updated in 2015 with extensive governance provisions that have never been made public. Any unilateral move by either Renault or Nissan to tip the balance could trigger an all-out war for control.

Renault owns 43 percent of Nissan — the bigger partner — which in turn owns 15 percent of Renault, with no voting rights. The 2015 agreement granted Nissan guarantees preventing Renault from interfering in its governance, a move Nissan considered necessary because the French government is Renault’s most powerful shareholder.

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