Nissan shares tumbled more than 6% following Mercedes-Benz's Monday announcement of its intention to sell the 3.8% stake, the stock's steepest single-day fall since early July.

The sharp decline underscores investor doubts about Nissan's recovery efforts as the company grapples with trade barriers and declining sales across its crucial USA and Chinese markets. The Japanese manufacturer reported a £353 million loss for the quarter ended in June.

The disposal follows Nissan's agreement earlier this year with longtime partner and major shareholder, Renault, to restructure their alliance, reducing the minimum shareholding requirement from 15% to 10%.

Mercedes-Benz offloaded its Nissan shares at 341.3 yen per share – a 5.98% discount to Monday's closing price of 363 yen, the source revealed. The shares were marketed within a range of 337.5 to 341 yen, according to a term sheet reviewed by Reuters.

Interest exceeded the available shares, said the source, who requested anonymity owing to the sensitive nature of the information. The deal's ten largest investors secured approximately 70% of the shares on offer.

Nissan declined to comment, while Mercedes-Benz said it had nothing to add beyond its previous statement.

On Monday, a German manufacturer spokesperson described the Nissan holding – transferred to pension assets in 2016 – as lacking strategic value and characterised the sale as portfolio streamlining.

Renault maintains a 35.7% stake in Nissan, holding 17.05% directly with the remainder through a trust structure. The French company wrote down its Nissan investment by £7.3 billion last month.

"Renault will likely continue looking to reduce its Nissan stake, though contractual restrictions limit open market sales," observed Christopher Richter, automotive analyst at CLSA. "Whilst Nissan previously showed interest in purchasing these shares, tighter finances have diminished Nissan’s appetite for share buybacks from Renault."

New Nissan chief executive, Ivan Espinosa, appointed in April, has outlined a recovery strategy targeting renewed profitability. Key measures include reducing global production capacity from 3.5 million to 2.5 million vehicles and cutting manufacturing sites from 17 to 10 by fiscal 2027.

Espinosa acknowledged last month that Nissan remains in early recovery stages while making headway on cost-reduction initiatives.

Seiji Sugiura, senior analyst at Tokai Tokyo Intelligence Laboratory, anticipates Renault will gradually reduce its Nissan stake as the companies’ partnership continues to weaken.

Nissan has struggled since former leader Carlos Ghosn's departure. Ghosn, who was the architect behind the Renault-Nissan alliance, was charged by Tokyo prosecutors with financial impropriety – allegations he continues to deny.