Renault-Nissan Alliance
Encyclopedia
Renault-Nissan Alliance is a strategic partnership between Paris-based Renault
and Yokohama, Japan-based Nissan, which together sell one in 10 cars worldwide. The companies, which have been strategic partners since 1999, have 350,000 employees and five major brands: Renault, Nissan, Renault Samsung Motors, Dacia and Infiniti. They sold 7.28 million cars in 190 countries in 2010, behind Toyota and General Motors
for total volume.
The strategic partnership between Renault and Nissan is not a merger or an acquisition. The two companies are joined together through a cross-shareholding agreement. The structure was unique in the auto industry during the 1990s consolidation trend and later served as a model for PSA Peugeot Citroën and Mitsubishi, and Volkswagen and Suzuki,, though the later combination failed. The Alliance itself has broadened its scope substantially, forming additional partnerships with automakers including Germany's Daimler
, China's Dongfeng Motor
, and Russia's AvtoVAZ
.
Carlos Ghosn
is the Chairman and CEO of the Alliance. Ghosn is a Brazilian-Lebanese-French businessman who is also Chairman and CEO
of Nissan Motors and holds the same positions at Renault. Ghosn has compared the Renault-Nissan partnership to a marriage: "A couple does not assume a converged, single identity when they get married. Instead, they retain their own individuality and join to build a life together, united by shared interests and goals, each bringing something different to the union. In business, regardless of the industry, the most successful and enduring partnerships are those created with a respect for identity as the constant guiding principle."
Ghosn has refuted calls for a conventional merger or separation, advocating an evolutionary approach that results in more and more joint development between the two companies. "You have to be careful that at the end of the day, by trying to do more in the short-term you don't end up destroying what had been delivering so much result on the mid-term and long-term," Ghosn was quoted as saying in March 2011 Reuters Special Report, in which he said conventional acquisitions in the auto industry in the past decade have failed. "It is not validated by any example in the car industry that this works. Not one example. And saying something different is just rubbish."
The goal of the Alliance is to increase economies of scale for both Renault and Nissan without forcing one company's identity to be consumed by the other's. The Alliance achieves scale and speeds time to market by jointly developing engines, batteries and other key components. For instance, Renault builds nearly all of the diesel engines in Nissan cars sold in Europe. Nissan’s market share increases in Europe have been a result of badging various Renault van models such as the Renault Kangoo/Nissan Kubistar, Renault Master/Nissan Interstar, Renault Trafic/Nissan Primastar.
Collaboration between Renault and Nissan focuses on capital-intensive research projects such as sustainable, zero-emission transportation and development of automobile manufacturing in emerging markets such as Russia and India. The Alliance also oversees purchasing for both companies, ensuring larger volume and thus better pricing with suppliers. The Alliance reported more than €1.5 billion in synergies in 2010.
The Alliance develops “best practices,” borrowing systems and controls from one company to strengthen the other company where appropriate. The “Nissan Production Way” became the cornerstone of the "Système de Production Renault" standard used by all Renault factories. Renault reported productivity increasing by 15 percent due to the new system.
At the time it was created, Renault bought 36.8 percent of Nissan's outstanding stock, and Nissan vowed to buy into Renault when it was financially able. In 2001, after the company's turnaround from near-bankruptcy, Nissan bought a 15 percent stake in Renault, which in turn increased its stake in Nissan to 44.4 percent.
In 2002, the Alliance created the Renault-Nissan BV (RNBV), a strategic management company to oversee areas such as corporate governance between the two companies. Based in Amsterdam, it is owned 50/50 by Renault and Nissan and provides a neutral location for the Alliance to exchange ideas, build strategy and help leverage the maximum synergies between the two companies.
In 2006, the Alliance began exploratory talks with General Motors regarding the possibility of creating an industrial
alliance. The talks were instigated by GM minority shareholder Kirk Kerkorian
. GM reportedly demanded payment of several billion dollars to engage in an alliance, prompting Ghosn to call the terms "contrary to the spirit of an alliance." Discussions ended without agreement in October 2006, when Ghosn said, "It's clear the two sides have completely different appetites for an alliance."
In May 2008, as part of the Alliance’s zero emission strategy, Nissan and NEC formed a joint-venture company, Automotive Energy Supply Corporation (AESC) to focus on the development and mass production of advanced lithium-ion batteries for a wide range of automotive applications from hybrids, electric vehicles to fuel-cell vehicles. AESC began production in 2009 at its facility at Nissan’s Zama plant in Kanagawa Prefecture where annual capacity is 65,000 units. Globally, Alliance battery production capacity is expected to be 500,000 units a year by the end of 2013. Other Alliance battery production sites, announced in 2009, include France, Portugal, the UK and the U.S.
The Alliance has created partnerships with more than 100 public and private organizations to create consumer buying incentives and EV infrastructure investment. The Alliance also partners with Project Better Place for the first wide-scale deployment of zero emission vehicles in Israel and Denmark in late 2011.
Immediately after the announcement, Renault and Daimler began working together on combined next-generation small cars: the Renault Twingo and smart fortwo, including electric versions as well as expanding both model ranges. The launches of the jointly developed small car models are scheduled to begin in 2013.
The smart plant in Hambach, France, will be the production location for two-seater versions, while the Renault plant in Novo Mesto (Slovenia) will be the production location for the four-seater versions. Future models will also be available with an electric drive from launch. Powertrain sharing will focus on fuel-efficient, diesel and petrol engines. The Alliance will provide 3- and 4-cylinder petrol and diesel engines to Daimler.
The companies have agreed to share powertrain and development work on future projects across both passenger cars and light commercial vehicles. The deal will allow powertrain sharing between Infiniti and Mercedes-Benz vehicles, and regional co-operation in the United States, China and Japan between Nissan, Infiniti and Daimler. Daimler will reportedly provide current 4- and 6-cylinder petrol and diesel engines to Infiniti.
Nissan invested 2.6 billion Brazilian reais (US$1.5 billion or €1.1 billion) to construct an all-new manufacturing facility and to develop, industrialize and launch new products in Resende, in the state of Rio de Janeiro. The all-new Nissan factory, scheduled to begin production in the first half of 2014, will have the capacity to produce up to 200,000 units annually and will create up to 2,000 jobs directly associated with the plant.
Renault invested an additional 500 million reais (US$285 million or €212 million) to expand an existing factory in Curitiba, in the state of Parana. The expanded plant will have an annual capacity of 380,000 vehicles per year starting in 2013. During the product cycle spanning 2010-2015, Renault will have invested an additional 1 billion Brazilian reais (US$571 million, or €423 million) to cover the development, industrialization and launch of new vehicles for Brazilian consumers.
Purchasing for Renault and Nissan in Brazil will operate through the common Renault-Nissan Purchasing Organization, which will work closely with suppliers throughout Brazil to ensure that all parties maximize economies of scale. In addition to purchasing, the companies will also work closely on supply chain management and manufacturing issues.
The plant can produce four separate platforms and eight body styles in random production order. Both sub-assembly and parts supply to the line are totally flexible. Efficiency is improved by having bumper and plastic moldings produced on site while the assembly line boasts a highly efficient logistics layout with a 100 per cent kit supply system to the lineside which saves operators having to pick parts from more than one place reducing the need to walk to collect parts. This is a development of what Nissan does at its Oppama, Japan and Sunderland, UK facilities. The Renault team supports powertrain development, vehicle engineering, information systems as well as styling and special project support for Renault's Mumbai-based design studio.
, known for its Lada
range of vehicles. Through the Alliance, Renault and Nissan intend to increase ownership in AvtoVAZ to 50 percent. The Alliance’s market share objective in Russia is to expand from 33 per cent to 40 per cent by 2015 with AvtoVAZ. With Renault’s 25 per cent shareholding in AvtoVAZ, the Alliance has three plants in Russia at Togliatti, Moscow and St Petersburg and total production capacity will be 1.3 million units by 2012.
Directly through the Alliance, Renault entered world's largest automotive market in 2009, introducing the brand through its low-cost cars including Laguna III, Koleos and compact MPV starter-Scenic. In February 2011, the Alliance inaugurated its China Warehouse in Shanghai, further establishing the partnership between Renault, Nissan and Dong Feng. The 8,000 square meter complex will provide a full range of auto parts, including 3,000 Renault and 10,000 Nissan parts covering almost all the imported models in China. It will also develop "best practices" for system optimization and shared technical platforms.
Renault
Renault S.A. is a French automaker producing cars, vans, and in the past, autorail vehicles, trucks, tractors, vans and also buses/coaches. Its alliance with Nissan makes it the world's third largest automaker...
and Yokohama, Japan-based Nissan, which together sell one in 10 cars worldwide. The companies, which have been strategic partners since 1999, have 350,000 employees and five major brands: Renault, Nissan, Renault Samsung Motors, Dacia and Infiniti. They sold 7.28 million cars in 190 countries in 2010, behind Toyota and General Motors
General Motors
General Motors Company , commonly known as GM, formerly incorporated as General Motors Corporation, is an American multinational automotive corporation headquartered in Detroit, Michigan and the world's second-largest automaker in 2010...
for total volume.
The strategic partnership between Renault and Nissan is not a merger or an acquisition. The two companies are joined together through a cross-shareholding agreement. The structure was unique in the auto industry during the 1990s consolidation trend and later served as a model for PSA Peugeot Citroën and Mitsubishi, and Volkswagen and Suzuki,, though the later combination failed. The Alliance itself has broadened its scope substantially, forming additional partnerships with automakers including Germany's Daimler
Daimler
- Daimler with reference to motor vehicles :refers to:* Gottlieb Daimler , German automobile inventor- Business co-founded by Gottlieb Daimler :...
, China's Dongfeng Motor
Dongfeng Motor
Dongfeng Motor Corporation along with its listed subsidiaries comprise one of China's largest vehicle manufacturers.Traditionally included as one of the "big 3" Chinese automakers, Dongfeng is currently in the top 4 along with Chang'an Motors, FAW Group, and Shanghai Automotive Industry Corporation...
, and Russia's AvtoVAZ
AvtoVAZ
AvtoVAZ is the Russian automobile manufacturer formerly known as VAZ: Volzhsky Avtomobilny Zavod , but better known to the world under the trade name Lada. The company was established in the late 1960s in collaboration with Fiat...
.
Corporate Structure and Strategy
The Alliance is a strategic partnership based on the rationale that, due to substantial cross-shareholding investments, each company acts in the financial interest of the other—while maintaining individual brand identities and independent corporate cultures. Renault currently has a 44.3 percent stake in Nissan, and Nissan holds a 15 percent stake in Renault. Although more companies have adopted such an arrangement, it remains controversial. Some business journalists have speculated that the companies should be joined in a conventional merger in order to make a "bold" move, while other interested parties have said that the companies should separate.Carlos Ghosn
Carlos Ghosn
Carlos Ghosn, KBE , born 9 March 1954, is a Brazilian-Lebanese-French businessman who is currently the Chairman and CEO of Yokohama, Japan-based Nissan and holds the same positions at Paris-based Renault, which together produce more than one in 10 cars worldwide...
is the Chairman and CEO of the Alliance. Ghosn is a Brazilian-Lebanese-French businessman who is also Chairman and CEO
Chief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
of Nissan Motors and holds the same positions at Renault. Ghosn has compared the Renault-Nissan partnership to a marriage: "A couple does not assume a converged, single identity when they get married. Instead, they retain their own individuality and join to build a life together, united by shared interests and goals, each bringing something different to the union. In business, regardless of the industry, the most successful and enduring partnerships are those created with a respect for identity as the constant guiding principle."
Ghosn has refuted calls for a conventional merger or separation, advocating an evolutionary approach that results in more and more joint development between the two companies. "You have to be careful that at the end of the day, by trying to do more in the short-term you don't end up destroying what had been delivering so much result on the mid-term and long-term," Ghosn was quoted as saying in March 2011 Reuters Special Report, in which he said conventional acquisitions in the auto industry in the past decade have failed. "It is not validated by any example in the car industry that this works. Not one example. And saying something different is just rubbish."
The goal of the Alliance is to increase economies of scale for both Renault and Nissan without forcing one company's identity to be consumed by the other's. The Alliance achieves scale and speeds time to market by jointly developing engines, batteries and other key components. For instance, Renault builds nearly all of the diesel engines in Nissan cars sold in Europe. Nissan’s market share increases in Europe have been a result of badging various Renault van models such as the Renault Kangoo/Nissan Kubistar, Renault Master/Nissan Interstar, Renault Trafic/Nissan Primastar.
Collaboration between Renault and Nissan focuses on capital-intensive research projects such as sustainable, zero-emission transportation and development of automobile manufacturing in emerging markets such as Russia and India. The Alliance also oversees purchasing for both companies, ensuring larger volume and thus better pricing with suppliers. The Alliance reported more than €1.5 billion in synergies in 2010.
The Alliance develops “best practices,” borrowing systems and controls from one company to strengthen the other company where appropriate. The “Nissan Production Way” became the cornerstone of the "Système de Production Renault" standard used by all Renault factories. Renault reported productivity increasing by 15 percent due to the new system.
History
The Renault-Nissan Alliance began March 27, 1999. At the time, the auto industry was in a period of rapid consolidation. Numerous companies merged or were acquired in high-profile deals, most notably Daimler’s acquisition of Chrysler in 1998 (which dissolved in 2007, when the companies separated).At the time it was created, Renault bought 36.8 percent of Nissan's outstanding stock, and Nissan vowed to buy into Renault when it was financially able. In 2001, after the company's turnaround from near-bankruptcy, Nissan bought a 15 percent stake in Renault, which in turn increased its stake in Nissan to 44.4 percent.
In 2002, the Alliance created the Renault-Nissan BV (RNBV), a strategic management company to oversee areas such as corporate governance between the two companies. Based in Amsterdam, it is owned 50/50 by Renault and Nissan and provides a neutral location for the Alliance to exchange ideas, build strategy and help leverage the maximum synergies between the two companies.
In 2006, the Alliance began exploratory talks with General Motors regarding the possibility of creating an industrial
alliance. The talks were instigated by GM minority shareholder Kirk Kerkorian
Kirk Kerkorian
Kerkor "Kirk" Kerkorian is an American businessman who is the president/CEO of Tracinda Corporation, his private holding company based in Beverly Hills, California. Kerkorian is known as one of the important figures in shaping Las Vegas and, with architect Martin Stern, Jr...
. GM reportedly demanded payment of several billion dollars to engage in an alliance, prompting Ghosn to call the terms "contrary to the spirit of an alliance." Discussions ended without agreement in October 2006, when Ghosn said, "It's clear the two sides have completely different appetites for an alliance."
Zero-emission vehicles
The Alliance aims to become the leader in zero-emission transportation. The Alliance committed €4 billion, or more than US$5 billion, into its electric vehicle (EV) and battery development programs. The first car based on this investment was the Nissan LEAF, which launched in late 2010 in the United States and Japan. Nissan and Infiniti will launch three additional EVs. Renault will launch four EVs starting in the fall of 2011 with the Fluence and Kangoo, followed by Twizzy and Zoe in the first half of 2012.In May 2008, as part of the Alliance’s zero emission strategy, Nissan and NEC formed a joint-venture company, Automotive Energy Supply Corporation (AESC) to focus on the development and mass production of advanced lithium-ion batteries for a wide range of automotive applications from hybrids, electric vehicles to fuel-cell vehicles. AESC began production in 2009 at its facility at Nissan’s Zama plant in Kanagawa Prefecture where annual capacity is 65,000 units. Globally, Alliance battery production capacity is expected to be 500,000 units a year by the end of 2013. Other Alliance battery production sites, announced in 2009, include France, Portugal, the UK and the U.S.
The Alliance has created partnerships with more than 100 public and private organizations to create consumer buying incentives and EV infrastructure investment. The Alliance also partners with Project Better Place for the first wide-scale deployment of zero emission vehicles in Israel and Denmark in late 2011.
Daimler Strategic Cooperation
The Alliance announced on April 7, 2010, a broad strategic co-operation with Daimler, reported to be worth €2 billion over five years. The companies are joined by an equity exchange that gives the Renault-Nissan Alliance a 3.1 per cent stake in Daimler and Daimler a combined 3.1 per cent in Renault and Nissan.Immediately after the announcement, Renault and Daimler began working together on combined next-generation small cars: the Renault Twingo and smart fortwo, including electric versions as well as expanding both model ranges. The launches of the jointly developed small car models are scheduled to begin in 2013.
The smart plant in Hambach, France, will be the production location for two-seater versions, while the Renault plant in Novo Mesto (Slovenia) will be the production location for the four-seater versions. Future models will also be available with an electric drive from launch. Powertrain sharing will focus on fuel-efficient, diesel and petrol engines. The Alliance will provide 3- and 4-cylinder petrol and diesel engines to Daimler.
The companies have agreed to share powertrain and development work on future projects across both passenger cars and light commercial vehicles. The deal will allow powertrain sharing between Infiniti and Mercedes-Benz vehicles, and regional co-operation in the United States, China and Japan between Nissan, Infiniti and Daimler. Daimler will reportedly provide current 4- and 6-cylinder petrol and diesel engines to Infiniti.
Brazil
In October 2011, the Renault-Nissan Alliance launched an $1.8 billion “Brazilian offensive” with two plants and a combined annual capacity of 580,000 vehicles per year.Nissan invested 2.6 billion Brazilian reais (US$1.5 billion or €1.1 billion) to construct an all-new manufacturing facility and to develop, industrialize and launch new products in Resende, in the state of Rio de Janeiro. The all-new Nissan factory, scheduled to begin production in the first half of 2014, will have the capacity to produce up to 200,000 units annually and will create up to 2,000 jobs directly associated with the plant.
Renault invested an additional 500 million reais (US$285 million or €212 million) to expand an existing factory in Curitiba, in the state of Parana. The expanded plant will have an annual capacity of 380,000 vehicles per year starting in 2013. During the product cycle spanning 2010-2015, Renault will have invested an additional 1 billion Brazilian reais (US$571 million, or €423 million) to cover the development, industrialization and launch of new vehicles for Brazilian consumers.
Purchasing for Renault and Nissan in Brazil will operate through the common Renault-Nissan Purchasing Organization, which will work closely with suppliers throughout Brazil to ensure that all parties maximize economies of scale. In addition to purchasing, the companies will also work closely on supply chain management and manufacturing issues.
India
The first dedicated Renault-Nissan Alliance plant and technical center opened in 2010 in Chennai, India.The first vehicle to be produced was the Nissan Micra. Starting in 2011, the plant will produce the Renault Koleos and Fluence. The factory is located in the Oragadam Expansion Scheme and represents an investment of about €800 million over seven years from February 2008 to 2015. The plant – which has full stamping, body, paint, plastic, trim and chassis shops with two test tracks—will have the capacity to produce 400,000 vehicles a year at full ramp up.The plant can produce four separate platforms and eight body styles in random production order. Both sub-assembly and parts supply to the line are totally flexible. Efficiency is improved by having bumper and plastic moldings produced on site while the assembly line boasts a highly efficient logistics layout with a 100 per cent kit supply system to the lineside which saves operators having to pick parts from more than one place reducing the need to walk to collect parts. This is a development of what Nissan does at its Oppama, Japan and Sunderland, UK facilities. The Renault team supports powertrain development, vehicle engineering, information systems as well as styling and special project support for Renault's Mumbai-based design studio.
Russia
In February 2008 Renault acquired a 25% share in AvtoVAZAvtoVAZ
AvtoVAZ is the Russian automobile manufacturer formerly known as VAZ: Volzhsky Avtomobilny Zavod , but better known to the world under the trade name Lada. The company was established in the late 1960s in collaboration with Fiat...
, known for its Lada
Lada
Lada is a trademark of AvtoVAZ, a Russian car manufacturer in Tolyatti, Samara Oblast. All AvtoVAZ vehicles are currently sold under the Lada brand, though this was not always so; Lada was originally AvtoVAZ's export brand for models it sold under the Zhiguli name in the domestic Soviet market...
range of vehicles. Through the Alliance, Renault and Nissan intend to increase ownership in AvtoVAZ to 50 percent. The Alliance’s market share objective in Russia is to expand from 33 per cent to 40 per cent by 2015 with AvtoVAZ. With Renault’s 25 per cent shareholding in AvtoVAZ, the Alliance has three plants in Russia at Togliatti, Moscow and St Petersburg and total production capacity will be 1.3 million units by 2012.
China
Nissan established a joint-venture company with China's Dongfeng Motor Co., Ltd. to produce and sell cars throughout China. In 2010, Nissan's sales in China soared to 1,023,638 units, making China Nissan's top market worldwide. Executives at Dongfeng said the reason they choose Nissan was because of the company's successful integration with strategic partner Renault, which allowed each entity to remain independent and brand-focused but gaining benefits of economies of scale.Directly through the Alliance, Renault entered world's largest automotive market in 2009, introducing the brand through its low-cost cars including Laguna III, Koleos and compact MPV starter-Scenic. In February 2011, the Alliance inaugurated its China Warehouse in Shanghai, further establishing the partnership between Renault, Nissan and Dong Feng. The 8,000 square meter complex will provide a full range of auto parts, including 3,000 Renault and 10,000 Nissan parts covering almost all the imported models in China. It will also develop "best practices" for system optimization and shared technical platforms.