No mergers in sight for Renault, Nissan and Mitsubishi

By Rahul Vaimal, Associate Editor
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Renault, Nissan Motor Co and Mitsubishi Motors Corp have said that the organizations do not have any plans for any consolidation and are working on a comprehensive plan to collaborate on car production to lessen costs and restore their troubled partnerships.

The organizations have been caught hard by the coronavirus pandemic just as they were trying to revise their association following the arrest of its chief architect, Carlos Ghosn, who had been driving for a consolidation despite strong objection from Nissan.

The new plan, which involves reducing the partner’s vehicle series by 20%, pooling production by region and gaining on joint designs, is expected to serve as a peace treaty.

“We do not need a merger to be efficient,” Renault Chairman Jean-Dominique Senard told a joint news conference. He also said current ties with Germany’s Daimler, which holds Mercedes-Benz, could be extended and that he expected to make an announcement in the coming weeks.

Renault and Nissan were among the most vulnerable global automakers moving into the coronavirus crisis and needed a clear strategy for using their union to rise from the fall and share the responsibility of investing in electric vehicles and other technology.

Competitors such as Peugeot and Fiat Chrysler have been driving ahead with plans to share costs and designs while the two biggest carmakers, Volkswagen and Toyota, already function as single units.

Renault shares, which have been lowered by stresses with Nissan and the French carmaker’s first decline in a decade in 2019, surged nearly 20% following the recent news. Daimler shares surged as much as 10% while Nissan concluded 5.5% higher.

Renault is also on track to receive $5.5 billion in French state funding, although the government desires it to keep car manufacturing in France in return.

Leader-follower System

Under their new program, the partnership intends to make savings by sharing production in a so-called leader-follower system, with one company heading for a certain type of vehicle and geography with others piggy-backing on the designs and manufacturing.

Renault Chairman Senard said that it would assist reducing costs, with collective proceeds on future compact sports utility vehicles (SUVs) coming to $2.2 billion.

In Brazil, for example, the new strategy means the partnership will go from making six models on four platforms or underlying vehicle architectures to seven models on one platform. A stricter design and development method at the association, whose best-known cars include the Renault Clio compact hatchback, the Nissan Rogue crossover SUV and the Mitsubishi Outlander SUV, would decrease its total number of models by 20% by 2025 from well over 80 presently.

Some analysts showed possible obstacles, however, saying the three companies continued secured in a partnership while some bigger competitors were not restrained by structural limitations.