|Key people||Carlos Ghosn (Chairman and CEO)|
|Products||Cars and trucks|
Renault–Nissan Alliance is a strategic Franco-Japanese partnership between automobile manufacturers Renault, based in Paris, France, and Nissan, based in Yokohama, Japan, which together sell more than one in 10 cars worldwide. The companies, which have been strategic partners since 1999, have nearly 350,000 employees and control seven major brands: Renault, Nissan, Infiniti, Renault Samsung Motors, Dacia, Datsun and Lada. The car group sold 8.1 million cars worldwide in 2012, behind Toyota, General Motors and Volkswagen for total volume. As of July 2013[update], the Alliance is the world's leading plug-in electric vehicle manufacturer, with global sales of 100,000 units delivered since December 2010.
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 General Motors and PSA Peugeot Citroën, PSA Peugeot Citroën and Mitsubishi, and Volkswagen and Suzuki, though the latter 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.
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 43.4 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,(subscription required) while other interested parties have said that the companies should separate.
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 consistently advocated an evolutionary approach that results in increasing integration and synergies for partners within the Alliance. "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, top-down 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, Nissan’s market share increases in Europe's competitive light commercial vehicle segment have been partly a result of badging various Renault van models such as the Renault Kangoo/Nissan Kubistar, Renault Master/Nissan Interstar, Renault Trafic/Nissan Primastar. In addition, Renault builds nearly all of the diesel engines in Nissan cars sold in Europe. Nissan uses these engines to accelerate sales throughout Europe, where it has already become the number one Asian brand in many key markets.
Collaboration between Renault and Nissan also focuses on capital-intensive research projects such as sustainable, zero-emission transportation and development of automobile manufacturing in emerging markets such as Brazil, Russia and India. The Alliance also oversees purchasing for both companies, ensuring larger volume and thus better pricing with suppliers. Renault and Nissan have also consolidated logistics operations under the Alliance to reduce costs. The companies claim that they generate more than €200 million per year by sharing warehouses, containers, shipping crates, seagoing vessels and customs-related processing. In total, 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.
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. 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."
The Alliance committed €4 billion (around US$5.2 billion) into its electric vehicle and battery development programs with the aim to become the leader in zero-emission transportation. Carlos Ghosn, Chairman and CEO of the Renault–Nissan Alliance predicted that by 2020 one in 10 new car sales will be an electric vehicle. The first electric car based on this investment was the Nissan Leaf, launched in December 2010 in the United States and Japan. Between 2011 and 2012, Renault launched four battery electric vehicles (BEVs), the Renault Kangoo Z.E. utility van, Renault Fluence Z.E., Renault Zoe, and the Renault Twizy urban quadricycle. The Nissan Leaf is the world's top selling highway-capable all-electric car in history, and it passed the global sales milestone of 50,000 units in February 2013. By July 2013 the Renault–Nissan Alliance is the world's leading plug-in electric vehicle manufacturer with global sales of 100,000 all-electric units delivered since December 2010, including more than 71,000 Nissan Leafs, about 11,000 Renault Twizys, almost 10,000 Kangoo Z.E. utility vans, about 5,000 Zoes, and over 3,000 Fluence Z.E. electric cars.
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 partnered with Better Place. After implementing the first modern commercial deployment of the battery swapping model in Israel and Denmark, Better Place filed for bankruptcy in Israel in May 2013.
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 in 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.
In January 2012, the companies announced they would jointly produce engines in Nissan's plant in Decherd, Tennessee. The collaboration marks the first production of Mercedes-Benz engines in the North America Free Trade region. The Tennessee plant’s strategic location and logistics links ensure a direct supply of engines starting in 2014 for the Mercedes-Benz C-Class, built at Daimler’s vehicle plant in Tuscaloosa, Ala. The deal marked the first time that Daimler had ever built engines in North America. The companies will together produce 250,000 4-cylinder gasoline engines in the plant.
In January 2013, Renault-Nissan, Daimler and a third partner, Ford Motor Co., announced three-way development on “affordable, mass-market” hydrogen fuel cell vehicles by 2017. The companies said they would invest equal amounts into the effort. By collaborating on the fuel cell stack and other system components, Ford, Daimler and Renault-Nissan hope to improve the technology and produce at a large scale. With a higher production volume, these automakers expect to generate economies of scale and offer more affordable cars.
Renault does not currently sell cars in the United States, but the Renault–Nissan Alliance operates a Silicon Valley Research Center in Sunnyvale, California, specializing in autonomous driving and connected cars. The office works with Silicon Valley-based technology companies and collaborates with Renault and Nissan technical centers in France and Japan. Areas of research include: autonomous vehicles; Internet-connected vehicles; and the area of human machine interface.
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$571 million, or €423 million) to cover the development, industrialization and launch of new vehicles for Brazilian consumers.
Purchasing for Renault and Nissan in Brazil will operate through the common Renault–Nissan Purchasing Organization, which will work closely with suppliers throughout Brazil to ensure that all parties maximize economies of scale. In addition to purchasing, the companies will also work closely on supply chain management and manufacturing issues.
On December 12, 2012, the Renault–Nissan Alliance became the long-term controlling shareholder of AvtoVAZ, Russia’s largest car company and owner of the country's biggest selling brand, Lada. According to the terms of the deal, Renault–Nissan is investing RUB23 billion (US$ 742 million) for 67.13% of the joint venture by mid-2014. As part of the deal, Renault–Nissan Chairman and CEO Carlos Ghosn will become Chairman of the Board of the joint venture, called Alliance Rostec Auto BV. The Alliance’s market share objective in Russia is to expand from 33 per cent to 40 per cent by 2015 with AvtoVAZ.
With AvtoVAZ, the Renault–Nissan Alliance builds Renault, Nissan and Lada models at its plant in Togliatti, which Russian Prime Minister Vladimir Putin inaugurated in April 2012. The assembly line has a maximum capacity of 350,000 cars per year. The Alliance also has plants in Moscow, St Petersburg and Izhevsk. With the Togliatti improvements and those planned at other manufacturing complexes, Renault–Nissan and AVTOVAZ will have a Russian capacity of at least 1.7 million cars per year starting in 2016. The investment in Russia began in February 2008, when Renault acquired a 25% share in AVTOVAZ.
On 18 September, 2013, the Alliance and AvtoVAZ announced the creation of a joint part-purchasing company, "Common Purchasing Organization” LLC. It is equally owned by Alliance's RNPO and the Russian manufacturer.
In July 2013, Renault-Nissan CEO Carlos Ghosn confirmed the development of an all-new car platform in India to meet the demands of new car buyers in the fastest growing economies of the world. The platform, code named CMF-A (Common Module Family - Affordable), is being designed and engineered in India, and it's the first all-new vehicle platform designed jointly from the ground up by both Renault and Nissan teams. The first cars on the platform will roll out in 2015.
The CMF-A cars will come from the Renault–Nissan Alliance plant and technical center in Chennai, which opened in 2010. The first vehicle to be produced was the Nissan Micra. Starting in 2011, the plant began building 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.
Nissan has a joint-venture company with China's Dongfeng Motor Co., Ltd. to produce and sell cars throughout China. In 2011, Nissan sold 1.24 million vehicles in China, making China Nissan's top market worldwide and making Nissan the top Asian automaker in China. 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.
Renault plans to enter the Chinese market with Dong Feng as well, signing a memorandum of understanding in April 2012. Renault anticipates a launch of vehicle production in China by 2016. The start of Renault production in China would complete the so-called "golden triangle" between Renault, Nissan and Dongfeng envisioned when parties signed the first agreement in 2000.
Directly through the Alliance, Renault entered world's largest automotive market in 2009, introducing the brand through imported cars including Laguna III, Koleos SUV and Scenic multi-purpose van. 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.
In July 2012, the Renault–Nissan Alliance announced it was investing 170 billion won (US$ 160 million) in Renault Samsung Motors, the South Korean company that Renault purchased in 2000. The new investment would result in production of up to 80,000 Nissan Rogue crossover sport-utility vehicles per year at the Renault Samsung Motors plant in Busan, taking advantage of the free trade agreements of Korea with the United States and the European Union and the favorable currency exchange. The Busan plant already produces the Renault Samsung SM3, SM5 and SM7 sedans and the crossover QM5. Part of the production is exported to other markets, under the name Renault Koleos. Production of Nissan Rogue will begin in 2014.
King Mohammed VI inaugurated the new Renault–Nissan Alliance plant in Tangier, Morocco, at a special ceremony attended by Carlos Ghosn, Chairman of Renault and Nissan. The new Renault–Nissan plant in Tangier represents an investment of €1 billion with annual production capacity of 400,000 vehicles with an estimated total staff of more than 6,000 by 2015.
In 2007, the Alliance announced a €600 million investment to build the Tangiers Industrial Project. Production of vehicles based on the Renault Logan platform is to begin in 2012 with one production line and an initial annual output capacity of 170,000 vehicles. The Alliance has said capacity will increase to 400,000 vehicles a year but has not given a timeline. The Tangiers development is one of the largest manufacturing complexes in the Mediterranean.
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