The Renault-Nissan Alliance, formerly known as the Renault-Nissan Alliance, is a French-Japanese strategic alliance between the automakers Nissan, headquartered in Yokohama, Japan, and Mitsubishi Motors, headquartered in Tokyo, Japan. Nissan, Nissan, and Mitsubishi Motors collectively sell more than 1 in 9 vehicles globally. Since 1999, Renault and Nissan have been strategic partners. Together, they manage eight key brands, including Renault, Nissan, Mitsubishi, Infiniti, Renault Samsung, Dacia, Alpine, and Venucia. The auto industry group, which produces the majority of light vehicles globally, sold 10.6 million vehicles in 2017. One year after Nissan purchased a controlling stake in Mitsubishi and subsequently became Mitsubishi an equal partner in the Alliance, the Alliance changed its name in September 2017.
The Alliance has sold more than 1 million light-duty electric vehicles globally since 2009, making it one of the top manufacturers of electric vehicles as of December 2021 [update]. The Nissan Leaf and Renault Zoe all-electric cars are the best-selling models in their EV lineup.
A merger or acquisition is not involved in the strategic cooperation between Renault, Nissan, and Mitsubishi. A cross-sharing arrangement ties the three businesses together. When the auto industry began to consolidate in the 1990s, this structure stood out. It later served as a model for General Motors, the PSA Group, Mitsubishi, the Volkswagen Group, and Suzuki, albeit the latter union was a failure. The Alliance has expanded significantly, establishing new alliances with automakers including China’s Dongfeng and Germany’s Daimler.
Press analysts have questioned the stability of the Alliance’s shareholding agreement as well as the Alliance’s long-term viability in the wake of Carlos Ghosn, the alliance’s chairman and CEO, being arrested, imprisoned, and fired from the alliance and all of its components in November 2018. Additionally, these analysts point out that because the recent business strategies of the corporations are intertwined, any attempts to restructure the Alliance may be detrimental to all of the members.
In This Article...
Renault and Nissan announce a survival strategy, ruling out a combination.
- According to sources speaking to Reuters, the new plan, which calls for decreasing the alliance’s vehicle ranges by a fifth, pooling manufacturing by region, and utilizing shared designs, is intended to work as a peace treaty.
- At a joint news conference, Renault Chairman Jean-Dominique Senard stated, “We don’t need a merger to be efficient.
After the news board meeting, the Alliance Renault-Nissan-Mitsubishi executives held a joint press conference at Nissan Headquarters in Yokohama, Japan, on March 12, 2019.
On Wednesday, Renault, Nissan Motor Co., and Mitsubishi Motors Corp. ruled out a merger in favor of a strategy to more closely coordinate automobile production in order to cut costs and save their strained alliance.
Since Carlos Ghosn, the partnership’s key architect, was arrested, the companies have been heavily damaged by the coronavirus pandemic. Ghosn had been pushing for a merger over strong opposition from Nissan.
He also stated that he hoped to make an announcement in the upcoming weeks and that current relations with Germany’s Daimler, which owns Mercedes-Benz, may be strengthened.
Prior to the coronavirus crisis, Renault and Nissan were two of the world’s weakest automakers and lacked a clear strategy for using their alliance to recover and split the cost of investing in new technologies like electric vehicles.
While the two largest automakers, Volkswagen and Toyota, currently function as a single entity, competitors like Peugeot and Fiat Chrysler have been moving ahead with plans to combine expenses and designs.
Following Wednesday’s developments, Renault shares, which had been negatively impacted by the disputes with Nissan and the French automaker’s first loss in ten years, increased by about 20%.
The French government plans to provide Renault 5 billion euros ($5.5 billion) in state help, but in exchange, it wants Renault to continue producing cars in France.
POSSIBLE RESOURCES
Each alliance member will concentrate on its “reference territories,” or top sales geographies.
The largest international markets, including China, North America, and Japan, will fall under Nissan’s purview. While Mitsubishi Motors controls Southeast Asia and Oceania, Renault dominates Europe, Russia, South America, and North Africa.
The reference company will work to maximize cost savings in their particular regions through practices including factory sharing and part buying.
A History of Conflicts Between Nissan and Renault
Nissan appears to want to benefit from this. According to several sources, executives from Renault and the company that makes the Altima car, Rogue and Pathfinder SUVs, will meet in Japan the following month. It’s important that the two company executives meet in person for the first time since the outbreak.
The discussion includes Renault’s plans to divide the manufacturing and assembly of its gasoline and diesel vehicles from that of its electric vehicles. But there is little doubt that the financial ramifications of Renault’s exit from Russia will dominate the debate.
In these conversations, the French delegation shows signs of weakness. Last month, Renault issued a warning that it would record a non-cash charge of $2.4 billion related to its exit from Russia. The share price of the corporation has decreased by more than 25,1% since the beginning of the Russian invasion. The stability of the business and its capacity to fund new endeavors are both seriously questioned by this decline.
It is difficult to assume that things would stay the same if there is currently no indication of impending structural changes in this alliance, which also includes Mitsubishi Motors Corp. We may anticipate announcements being made following the meeting, given the leaders who ought to attend. The new CEO of Renault, Luca de Meo, will be there, and Ashwani Gupta, Nissan’s COO, will speak on behalf of Nissan.
Rumors of potential modifications to cross-shareholdings are frequently started by the Renault-Nissan Alliance. While the Japanese group only owns 15% of Renault, Renault controls 43% of Nissan.
The long-standing tensions were rekindled when Carlos Ghosn was arrested in Japan in November 2018 on suspicion of financial embezzlement, a charge he denies. The Alliance was almost annihilated by it. For instance, the two businesses have resisted combining their engineering and technical staff.
Nissan and Renault interchangeably?
A kinder, more cohesive society might result from THE PANDEMIC. Certainly, that has an impact on the alliance between Renault, Nissan, and Mitsubishi. While teetering on the verge of bankruptcy, it has been competing for the title of largest automaker in the world. The union declared on May 27 that, like a couple set to divorce rekindling old loves during lockdown, they would give it another go out of worry that covid-19 may irreparably harm some auto manufacturers.
In an effort to avoid the drawbacks of a complete merger, the alliance was established in 1999. When manufacturing cars, these had frequently resulted in tears. However, in particular, the cross-shareholdings that kept Renault and Nissan together generated resentment. Nissan is a Japanese company, while Renault, a French company, owns a controlling 43.4% of it. Nissan also holds a 15% non-voting share in Renault. The French government’s influence over Nissan, which recently accounted for the majority of the group’s revenues, was felt through a 15% investment in Renault. Joint projects were challenging to handle because the engineers from the three organizations rarely agreed. The end appeared imminent when Carlos Ghosn, the person in charge of the tie-up, was detained in Japan in 2018 on suspicion of financial malfeasance.
The new strategy both accelerates and stifles Mr. Ghosn’s aspirations. According to Jean-Dominique Senard, head of both the alliance and Renault, the ex-intentions boss’s for a merger are dead. His ambition to rule the world is also unsuccessful. The partnership would prioritize profitability over volume, a strategy that helped Renault’s French rival PSA Group turn things around. Each member will concentrate on becoming a regional force rather than a global one: Nissan in North America, China, and Japan; Mitsubishi in South-East Asia; Renault in Europe, Africa, and South America.
The three companies will save expenses by sharing parts rather than just platforms, which is the fundamental building block of automobiles. According to Mr. Senard, this innovative strategy will reduce the price of building a new small SUV by EUR2 billion ($2.2 billion). The partnership will become “the most powerful combination of corporations in the world” in a few years thanks to all of this, he claims. Investors enjoy the way it sounds. Nissan’s stock price rose 12.5% today, while Renault’s soared 17%.
The enthusiasm could be unfounded. The subsequent decline in the world auto market and the consequences of Mr. Ghosn’s incarceration have hurt the triumvirate. Now, the virus might reduce industry sales this year by 20%. Nissan announced its first financial deficit since 2009 on May 28th, reporting a Y=40.5bn ($372m) annual operating loss. Even worse is the state of Renault. France’s finance minister, Bruno Le Maire, warned that it might “disappear” without government assistance. Renault’s own dismal results may be accompanied by information of a EUR5 billion rescue plan, which is anticipated on May 29.
That annoys me. Nissan, which also announced it would eliminate facilities, cut back on its lineup of automobiles, and reduce production capacity by 20%. The same should be done by Renault, but in order to satisfy its major shareholder, plants must remain open in France. On July 1st, Luca de Meo assumes leadership of Renault after leading SEAT, a division of the Volkswagen Group in Germany, to success. To maintain peace, the former marketer will need to use all of his persuasive skills.
Kiss and make up was the headline of this item, which featured in the Business section of the print edition.
What is the bond between Nissan and Renault?
The Alliance is a strategic alliance founded on the premise that each firm acts in the financial best interests of the other due to significant cross-shareholding investments while preserving separate brand identities and distinct corporate cultures. Nissan currently owns a voting stake in Renault of 15% and a voting stake in Nissan of 43.4%, giving Renault control over Nissan. Even though more businesses now use this model, it is still debatable. While other interested parties have suggested that the companies should separate, some business writers have suggested that the companies should be combined in a traditional merger to make a “bold” move.
Brazilian-Lebanese-French businessman Carlos Ghosn founded the Alliance and serves as its chairman and CEO. Until November 2018, he also served in same capacities at Nissan Motors and held them for an additional two months at Renault. Ghosn likened the Renault-Nissan alliance to a union: “When a couple gets married, they do not suddenly become one, united identity. Instead, they keep their uniqueness and come together to create a life together. They are brought together by common interests and aspirations, and each brings something unique to the partnership. The most effective and long-lasting partnerships in business, regardless of the sector, are those that are formed with respect for identity as the constant guiding principle.”
Ghosn frequently promoted an evolutionary strategy that resulted in greater integration and benefits for Alliance partners. Ghosn was quoted as saying in a March 2011 Reuters Special Report that conventional, top-down acquisitions in the auto industry in the past decade have failed, adding that one must be careful not to destroy what had been delivering so much in the mid-term and long-term by trying to do more in the short-term. “No example from the auto industry supports the claim that this works. Not even one. And anything otherwise is plain nonsense.”
The Alliance’s objective, as stated in public declarations, was to boost economies of scale for both Nissan and Renault without commodifying any company’s identity. After it was established, the Alliance developed its scale and sped up time to market by working together to create batteries, engines, and other crucial parts. Nissan, for example, has increased its market share in the competitive light commercial vehicle class in Europe in part by rebadging many Renault van models, including the Renault Kangoo/Nissan Kubistar, Renault Master/Nissan Interstar, and Renault Trafic/Nissan Primastar. Additionally, almost all of the diesel engines used in Nissan vehicles marketed in Europe are produced by Renault. Nissan makes advantage of these engines to boost sales throughout Europe, where it has already surpassed other Asian brands in a number of significant regions.
The focus of Renault and Nissan’s collaboration also extends to expensive research initiatives like the advancement of vehicle production in developing nations like Brazil, Russia, and India. The Alliance also manages purchasing for both businesses, assuring greater volume and better supplier price. To cut costs, Renault and Nissan have combined their logistical operations under the Alliance. The businesses assert that by sharing warehouses, containers, shipping crates, seagoing vessels, and customs-related operations, they produce more than EUR200 million annually. The Alliance reported synergies totaling more than EUR1.5 billion in 2010.
The Alliance creates “best practices,” using suitable cues from one firm’s systems and controls to strengthen the other organization. The “Nissan Production Way” established the “Systeme de Production Renault” standard that is followed by all Renault factories. Renault claimed that the new approach had increased productivity by 15%.