May 27, 2020 / 10:13 AM / in a month

Factbox: Renault and Nissan's plan to rebuild their alliance

TOKYO (Reuters) - The automaking alliance of Renault SA (RENA.PA), Nissan Motor Co (7201.T) and Mitsubishi Motors Corp (7211.T) outlined a new strategy on Wednesday whereby the strongest partner takes the lead in areas such as new technologies and parts procurement.

The plan puts a strong focus on cost savings as profits have plunged at the companies, a situation that has been compounded by the fallout from the coronavirus pandemic.

Here is a look at the main points of the plan:

LEADERS AND FOLLOWERS

The core of the new strategy is called the “leader-follower” scheme. Under it, the alliance member with the strongest position in a market, product or technology will spearhead the group’s efforts there, with the others supporting.

The alliance said the plan is all about squeezing the most efficiency from the partnership to curb costs.

The target is for model investment reductions of up to 40%. Almost half of the alliance’s vehicle lineup will be produced under the scheme by 2025, it said.

POINTS OF REFERENCE

Each member of the alliance will focus on its strongest sales geographies, dubbed “reference regions”.

Nissan will be responsible for the biggest global markets: China and North America, as well as Japan. Renault takes the lead in Europe, Russia, South America and North Africa, while Mitsubishi Motors has ownership of Southeast Asia and Oceania.

For their respective regions, the reference company will try to maximize cost savings in things such as factory sharing and parts procurement.

MORE IN COMMON

The alliance partners aim to standardise even more parts, and push beyond just common platforms to shared upper vehicle bodies.

In each product segment, there will be one “mother” vehicle engineered by the lead company and several “sister” vehicles from the other partners.

Alliance Chairman Jean-Dominique Senard gave Brazil as an example in his presentation on Wednesday, where the carmakers plan to go from six models using four different platforms currently to seven models on one single platform.

TECHNOLOGY LEADERS

Investment in the new technologies that are reshaping the auto industry globally are among the biggest costs for every carmaker now.

The alliance is applying the leader-follower model here too, with Nissan taking the lead in autonomous driving.

Renault will mainly be responsible for connected-car technologies, except in China where Nissan will have responsibility.

For electric vehicles (EV), the partners are splitting the workload. Nissan will lead in the development of an EV-specific architecture while Renault looks at electric compact cars. Mitsubishi Motors will spearhead plug-in hybrid technology development.

FILE PHOTO: The logos of car manufacturers Renault and Nissan are seen in front of dealerships of the companies in Reims, France, July 9, 2019. REUTERS/Christian Hartmann/File Photo

‘NO MERGER’

Senard said, however, that this even tighter cooperation was not leading to any kind of merger, which has been a bone of contention within the alliance for years.

“There is no plan for a merger of our companies,” he said. “As you can see, from all what we have said, we don’t need a merger to be efficient.”

Reporting by Kevin Buckland; Editing by David Clarke

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