Nissan and Renault Divvy Up Production Responsibilities

Nissan and Renault opted against a full merger on Wednesday, but neither side seemed to feel now was the time to disband the alliance and see how they might fare as a solo act. Every member of the Renault–Nissan–Mitsubishi Alliance took time to address financial concerns last year, encouraging further product integration as a cost-mitigation strategy. Despite Nissan shareholders and staff clearly losing interest in the French-led confederation, the brand seems to understand that leaning upon its allies might be the only way to get through a period of increasing economic uncertainty.

Mitsubishi slashed its 2020 financial forecasts ahead of the coronavirus pandemic by over $500 million while the other two issued numerous profit warnings in the latter half of 2019. Now the world is exiting lockdowns and assessing the economic damage they caused. Obviously, this is not the time to be burning bridges, even if some alliance partners aren’t enthralled with what’s probably waiting on the other side.

The new plan involves sharing the load by having each manufacturer lead development for segments and regions that play into their strengths. This leaves Renault predictably fronting things in Europe and Russia as it focuses on small cars. Meanwhile, Nissan will continue to be the go-to brand for China, Japan, and North America. It’ll also be put in charge of larger automobiles, leaving Mitsubishi to work on hybrid powertrains and budget products aimed at the developing world. On the mobility front, Nissan will be tasked with the continued development of autonomous driving as Renault focuses on Android-based connected car technologies.

Ideally, the group would like to see the strategy tamp down group development costs by at least 40 percent.

Automakers will also be enacting additional cost-cutting measures on an individual basis, according to the Financial Times. Both Renault and Nissan were in the midst of restructuring before the coronavirus pandemic shook the planet’s finances, and both plan on addressing the issue later this week.

From FT:

Renault is set to unveil €2bn in cost cuts on Friday, which could include the closure of plants in France and the loss of 5,000 jobs, mostly through staff attrition, by 2024.

Nissan is also expected to disclose a similar $2.8bn cost-cutting programme on Thursday as it seeks to weather its first net loss in 11 years.

While the companies already make close to half of their cars on shared bases, known as platforms, they will now begin sharing top halves of the models to cut costs.

Half of the new models will be developed using this system by 2025, with plans for 80 per cent of vehicles made on common platforms by 2024, resulting in a fall of a fifth in the overall range of models sold by the businesses.

Reuters reported that, in Brazil, the new approach would force the alliance to go from assembling six models on four separate platforms to seven models riding on just one common architecture. Other regions will see similar changes, though perhaps not to the same degree.

Meanwhile, all sides have walked back the merger talk. Despite France being rather insistent that Carlos Ghosn’s dream be realized with a full merger, Nissan no longer shares this vision. Trust within the alliance has broken down, with the most glaring incident being Ghosn’s 2018 arrest over alleged financial crimes — which seems to have been facilitated (at least in part) by Nissan officials. Rather than achieving full integration, group leadership began to fracture and seemed to be making grabs for power while Japanese investors grew resentful of the increasing European influence.

Mr. Ghosn could be seen as a casualty of a corporate war run amok, but he played a big role in starting it, spending his final years as an automotive executive attempting to push through a merger that Japan didn’t appreciate.

Fortunately, that contentious matter has been taken off the table for the time being. Also abandoned is Ghosn’s old strategy of chasing down sales at every opportunity. “The alliance’s new model focuses on efficiency and competitiveness rather than on volumes,” Senard explained. “Our aim is to increase the competitiveness and profitability of each of the three companies.”

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