Decisions needed on Renault-Nissan alliance future, says GlobalData

Following the news that Nissan has issued a statement to downplay suggestions that it could be readying for a possible split with Renault;

David Leggett, Automotive Editor at GlobalData, a leading data and analytics company, offers his view:

“For both Renault and Nissan, walking away from their global industrial alliance is a difficult step to take. The ongoing Carlos Ghosn affair and rising tensions between the two companies mean a merger is off the agenda, but both will be aware of the difficulties involved in separating out their existing joint activities and operations.

“The alliance has delivered substantial benefits to its participants over many years in engineering savings, supply-chain leverage and scale economies. Annual cost savings are in excess of €5bn, with €10bn a year targeted, helped by the 2017 addition of Mitsubishi to the club.

“Both Renault and Nissan clearly need to set their strategic direction and the status of their alliance will be at the heart of that. If they do split, then they each need to have a strategy for a competitive response that compensates for the lost alliance cost savings.

“Nissan has particular problems in turning around its losses and recovering share and margin in North America. Meanwhile, Renault is facing extremely competitive conditions in the European car market. Both are subject to rising pressures on all companies in the auto industry, especially rising investment commitments in costly advanced technologies such as electrification.

“There is a clear need for clarity on if and how the alliance can continue and how it can continue to benefit the business growth strategies of its participants. This will also be a top priority for Renault’s new permanent CEO – expected to be named this week.”

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