Renault-Nissan: The Giant That Wants To Be Small

Looking at Renault’s European sales, one sees red. Looking at Renault’s stock chart, one sees the best valuations in the last two years, and a trend that is going up. What does the market know we don’t? World’s Largest AutomakersRankOEMUnits 20121Toyota9,909,4402GM9,288,2773Volkswagen9,070,0004Renault-Nissan8,101,3105Hyundai Group7,120,374On a global stage of automotive braggadocio, Renault CEO Carlos Ghosn plays the role of a Columbo: Unassuming, a little disheveled at times from hours of arm waving, often comical looking, and, oh, one more thing: The Nissan-Renault Alliance is the world’s fourth largest automaker, bigger than Hyundai, bigger than Ford. It will never show up that way on global rankings, because Carlos Ghosn does not want it that way.Renault sold 2,550,286 units worldwide in 2012, down 6.3 percent from 2011. Nissan sold 4,940,133 units, up 5.8%. Often forgotten: Russia’s largest carmaker Avtovaz is under control of the Renault-Nissan Alliance. Avtovaz added 610,891 vehicles to the tally. The Russian car market, already at 2.9 million units in 2012, is expected to eclipse Germany as Europe’s largest car market this year and for many years to come. Russia has just started, whereas Western Europe is going into decline. Avtovaz is for Russia what Volkswagen is for Germany, and the Renault-Nissan Alliance owns it.The offerings of Renault, Nissan, and Avtovaz are more cohesive than those of some other makers that drag around a legacy jumble of platforms and technologies. Scratch on Avtovaz’s Lada cars, and you find Renault’s Dacias, a Nissan Micra or Cube shares the same platform as a Renault Clio or Twingo. The Dacias are not old Ceaucescu era cars, as some may think, but derivatives of a joint B platform by Nissan and Renault. Nevertheless, this highly integrated alliance will continue to report as separate companies. Renault owns more shares in Nissan (44.3 percent) than for instance GM in its Wuling joint venture. 100% of the Wuling sales are counted as GM’s. Renault counts zero percent of Nissan.The Nissan-Renault Alliance is front and center in the push for low-cost cars, the future battlefield of the global auto business. Nissan is reintroducing its Datsun brand, the Alliance is working on a sub $5,000 car, primarily targeted at emerging markets, but possibly also at first world markets such as Europe that need to prepare for decades of decline.Oddly, a company that some recklessly regard as one of the most affected could be best positioned in that new high volume low cost race.