Nissan will lead the alliance in China and Japan © AFP/Getty Images
Nissan will lead the alliance in China and Japan © AFP/Getty Images

Carmaker alliance aims to cut model investment by 40%

27 May 2020

Renault, Nissan and Mitsubishi have revamped their alliance with a new “leader-follower” scheme that aims to cut model investment by up to 40%. 

The automakers announced several initiatives to form part of a new cooperation business model to “enhance the competitiveness and profitability” of the firms.

Renault chairman Jean-Dominique Senard ruled out a full merger between Renault and Nissan, adding they do not need a merger to be efficient. 

The merger had been proposed by the alliance’s former boss Carl Ghosn, before his arrest last year.

The alliance revealed it was launching a “leader-follower” scheme instead that would see one company leading for a particular type of vehicle and geography and the others following.

Each company will be focused on its core regions, referred to as “reference” regions. Nissan will be the reference for China, North America and Japan; Renault in Europe, Russia, South America and North Africa; and Mitsubishi Motors in ASEAN and Oceania.

“With each company becoming a reference company in respective regions, the opportunities for sharing will increase to maximise fixed cost-sharing, as well as leveraging each company’s assets,” the firms said. 

“The leader-follower scheme is expected to deliver model investment reductions of up to 40% for vehicles fully under the scheme. Those benefits are expected to come in addition to conventional synergies that are already delivered today.”

The alliance is expected to develop and produce almost 50% of models under the leader-follower scheme by 2025.

The carmakers added they would build on existing benefits stemming from the alliance, including joint purchasing by using their respective leadership positions and geographic strengths to support their partners’ business development.

Senard said: “The alliance is a unique strategic and operational partnership in the automotive world and gives us a strong edge in the ever-changing global automotive landscape.

“The new business model will enable the alliance to bring out the most of each company’s assets and performing capabilities, while building on their respective cultures and legacies. The three companies of the alliance will cover all vehicle segments and technologies, across all geographies, for the benefit of every customer, while increasing their respective competitiveness, sustainable profitability and social and environmental responsibility.”

Renault is set to unveil €2bn in cost cuts that could include the closure of plants in France and the loss of 5,000 jobs by 2024, while Nissan is expected to set out a $2.8bn cost-cutting programme, according to the Financial Times.

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