When Luis Schweitzer and Yoshikazu Hanawa signed the alliance agreement between Renault and Nissan in Tokyo during 1999, hardly anyone had talked in favor of the alliance being a success. The alliance was based on cross-shareholding and mutual self-interest with an objective to maximize synergies without destroying each other's brand identity. Over a decade from then, they went on to beat every odds to become one of the most successful business model in automobile industry.
Inter-cultural Dimensions:
Success didn't come knocking on the door for Renault-Nissan. The geographic and cultural difference put forth a tricky mission in achieving an efficient and effective organizational communication.
But Carlos Ghosn had turn the tables by implementing several key strategies and practices which helped the alliance in achieving competitive performance.
The Alliance Structure
Renault holds 43.4% share in Nissan and Nissan holds 15% share in Renault. The Renault-Nissan BV formed in 2002 is equally owned by Renault and Nissan responsible for Strategic Management of the Alliance.
In 2013, the alliance announced collaboration with Daimler AG for the joint development of common fuel cell system to speed up availability of zero-emission technology and significantly reduce investment costs. As a part of the agreement, Daimler will hold 3.1% stake in Renault-Nissan. Renault and Nissan will each hold 1.55 percent of Daimler.
Brand Mix:
The alliance have several brands at their disposal like Renault, Nissan, Infiniti, Renault Samsung Motors, Dacia, Datsun and Lada.
Product Portfolio
With their range of brands at their disposal the alliance had sold 8 million cars worldwide in 2012 and are the third largest car makers behind General Motors and Volkswagen.
In 2012, RNBV set a target to reach 10 million sales units by 2016 and an increment in ROI by 0.6%.
The gap between Nissan and Renault brand products are widening, since both manufacture vehicles out of same platform, one of the possibility for this could be product overlapping and Nissan is getting the benefit out of this.
Nissan’s sales are being increased since 2003 and at the same time the sales of Renault brands are coming down.
Financial Analysis:
Renault’s global revenue had decreased by 3.19%, while Nissan’s stay flat. The associate income from Nissan Motor for Renault also decreased by 7.36%.
The Renault-Nissan Alliance Timeline
- 1999 – Luis Schweitzer and Yoshikazu Hanawa sign the alliance agreement in Tokyo.
- 2000 – Carlos Ghosn is appointed President and Chief Operating Officer of Nissan.
- 2001 – Carlos Ghosn becomes President and Chief Executive Officer of Nissan.
- 2002 – The first vehicle built on the common B platform, ‘Nissan March’ launched in Japan.
- 2003 – Sales of the new Nissan Micra, the European version of the Japanese March begin in Europe.
- 2004 – Sales of the Renault Modus, Renault’s first vehicle built on the common B platform, begin in Europe.
- 2005 – Carlos Ghosn is appointed President and CEO of Renault while remaining CEO of Nissan and becoming first person to head two Global 500 companies simultaneously.
- 2006 – Renault and Nissan announce that they are working together on Electric Vehicle development
- 2007 – Renault and Nissan create a new technology and business center in India (Renault Nissan Technology and Business Center in India : RNTBCI)
- 2008 – Renault acquires 25% stake in AVTOVAZ Russia’s No.1 car maker and owner of the Lada brand.
- 2009 – The alliance celebrates 10th anniversary and creates RNBV dedicated team of Alliance Directors.
- 2010 – Renault and Nissan open Alliance plant in Chennai, India – the first dedicated plant conceived and constructed as a joint manufacturing facility in 2011.
- 2011 – Renault announces a € 200 million investment to expand plant in Curitiba, Brazil, while Nissan invests € 1.5 billion to build a new plant in Resende, Brazil. Together, the two companies will have an annual capacity of 580,000 vehicles and launch 23 new models in Brazil in the next five years.
- 2012 – Nissan and Daimler announce production of Mercedes-Benz 4-cylinder gasoline engines at Nissan’s powertrain assembly plant in Decherd, Tennessee, starting in 2014 for a capacity of 250,000 units per year.
The production of vehicles off a single platform might have helped to cut the operating costs in R&D and spares purchase but had resulted in product overlapping. For a layman, the vehicles look same in terms of look and price range and this had eventually handicapped their ability to penetrate the market. The product lapping is one of the major issues that RNBV has to deal with in order to sustain a consistent and long term success in the automobile market.
Source : Renault SA, Nissan Motor Co., Ltd. , Daimler AG, Renault-Nissan BV, ACG
There is no question about effective research and overhead utilization but 250k per year is no baby step for Nissan Daimler. And this is very different from VW building Porshe. It will be interesting to watch how the Market receives especially this brand equity.
Probably this alliance would become a model alliance for others as in this tough time they have proved with sale figures .
Shahzad Ahmed
C.V & C.E Finance
Mahindra & Mahindra Financial Services Ltd
In India they can do wonders if Ashok Leyland too become success like dost and upcoming projects..
Kishor Sankhe
Sourcing & Vendor Development
Mahindra Navistar Automotives Ltd.
Yes, indeed its an alliance against all odds, still its working magically market after market and making its presence felt. Though it has faced many difficulties since its inception, but credit goes to Mr. Carlos Ghosn for turning the tables by implementing several key strategies and practices which helped the alliance in achieving competitive performance.
Such types of startegic allaince requires in todays crtical market condition, to avoid the initial plant development and running cost.
Work Together and Live & Support each others and Make strong Together than Others = R/N Alliance.
“United we stand , Divided we fall” is an old saying held true by both of these companies who run on different sets of core strengths translated into benefits of car buyers.
Its a great example of JV and success. They are penetrated each segment in India with competative price and better vehicle performance.
You got a nice informative blog for auto industry article.Really looking forward to read more.
It is a nice informative article of JV & success of auto industry.However there are certain auto mobile JV in India e.g.Tata-Mercedis failed. why…..? Do you have any idea/information about that. Looking for more information Please.
To-day scenario the Renault-Nissan tie up will do better in Indian market,the company needs to focus on small hatch-back car with stylish look and affordable price with good mileages or option of dual fuel (CNG and petrol.)I’m sure the response will be at large.
P P Deshmukh
Excellent Article!This alliance is gorgeous¡¡ and it has became very profitable!
Jesus Ozumbilla
Management Consulting
Fleet Manager at Renault
Naucalpan de Juárez, Mexico
Good article!
When I read this note, I remember the good times. I will always be grateful for his decision to be part of the change from the trenches, with this group of high professionalism that has marked me and has been a big step in my career, have taught me to work in complex environments with high productivity and a good professional being a better person. Thanks Miguel Ángel Martorell and Andres Marin (Nissan Motor Iberica) for giving me that opportunity.
Gustavo Malet
Supplier Quality Assurance Purchasing
Scania Argentina S.A.