The auto industry needs further consolidation, but Renault SA and Nissan Motor Co should strengthen their alliance before being involved in any new merger moves, the French Finance Minister Bruno Le Maire said here on Sunday, according to a report from Dow Jones Newswires supplied to Efe news.

In a tumultuous chapter in the auto industry, a proposal by Fiat Chrysler Automobiles NV to merge with Renault collapsed last week because of concerns in the French government over the impact on Renault’s partnership with Nissan.

Le Maire said that protecting the two-decade old partnership between Renault and Nissan was the priority for the French government, Renault’s largest shareholder.

“We all know that because of the technological transformations taking place, in particular with electric and connected vehicles, there will be a need for industrial consolidation,” Le Maire said at a press conference following a Group of 20 meeting of global financial leaders in Japan on Sunday.

“But this can only be the second step, after the reinforcement of the alliance.”

Ties between Nissan and Renault have been under strain since Renault tried to explore a merger with Nissan. Officials at Nissan, a larger company than Renault, are strongly resistant to merger talk. They fear having to answer to the French government and see their company as more technically advanced.

The companies currently share technology and vehicle parts as part of a three-way tie-up with Mitsubishi Motors Corp. Le Maire acknowledged the benefits to Renault from its ties to Nissan, the Dow Jones report added.

“It’s allowed us to be one step ahead on the most important technologies for the automobile industry in the 21st century. I’m thinking in particular about electric vehicles in which Renault today is one step ahead thanks to the alliance with Nissan,” he said.

Concerns about a merger at Nissan contributed to the downfall of former Chairman Carlos Ghosn. Jean-Dominique Senard, who replaced Ghosn as Chairman of Renault, fuelled mistrust at Nissan by keeping the Japanese auto maker in the dark about the Fiat Chrysler merger talks before they were publicly disclosed, according to people familiar with the matter.

Renault owns 43.4 per cent of Nissan, while Nissan owns 15 per cent of Renault. Le Maire has raised the prospect of the French government lowering its 15 per cent stake in Renault as part of a shareholding reorganization, but he said that would only be a possibility in the longer term.

Le Maire heads to Tokyo on Monday, where he will meet Japanese Finance Minister Taro Aso. He said he has no plans to meet with Nissan Chief Executive Hiroto Saikawa and it was up to the heads of each company to discuss how to bolster their alliance.

“All options can be envisaged, and it’s up to Renault and Nissan to make proposals,” he said.