Background of Renault Nissan Alliance The Renault-Nissan Alliance was established in March 1999.
. It is the first industrial and commercial partnership of its kind involving a French and a Japanese company. They are the world's third-largest automotive group (2011) and are also present in the major world markets (United States, Europe, Japan, China, India and Russia). The two global companies are linked by cross-shareholdings. In the past half-decade, the Alliance has emerged as a buffer to protect partners during regional downturns, and it has accelerated Renault and Nissans momentum in some of the worlds fastest growing economies. The alliance is formally composed of three Renault senior executives and three Nissan senior executives, and it is supported by the full Executive Committee of both companies. It is chaired by Renault-Nissan Alliance Chairman and CEO Carlos Ghosn. The Alliance has helped Renault and Nissan outperform historic regional rivals, elevating both companies into an elite tier. The Renault-Nissans combined vehicle sales amount to an increased from 4.9 million units in 1999 to more than 8.03 million units in 2011. Aims & Objectives of this Alliance Their aim is to rank among the top three general automakers in terms of:
quality and value of products and services in each region and market segment key technologies in engines, electronics and the environment operating profit
Their objective is to establish a powerful automotive group and develop synergies while conserving the corporate culture and identity of each brand.
What push them towards the strategic alliance?
To achieve Economies of Scale
The goal of this alliance was to achieve competitive economies of scale by producing at the lowest cost possible for both Renault and Nissan without forcing one company's identity to be consumed by the others. For instance, the market share of Nissan had increased considerably in Europe's competitive light commercial vehicle segment as a result of badging various Renault van models such as the Renault Kangoo/Nissan Kubistar, Renault Master/Nissan Interstar, Renault Trafic/Nissan Primastar while Renault had built nearly all of the diesel engines in Nissan cars that were sold in Europe. Nissan had also used these engines to accelerate sales throughout Europe, where it has already become the number one Asian brand in many key markets. The Alliance also oversees purchasing for companies, ensuring larger volume and thus increases bargaining power and better pricing with suppliers.
To expand their distribution networks
The Nissan-Renault alliance will allow them to expand their distribution network in emerging market such as Brazil, Russia and India, thus accelerating their international development. They will progress into financial market faster and with lower costs as they dont have to build plants. For example, Renault builds Cars in Nissan Mexico plants and Nissan uses Renaults Brazil plants and distribution networks. Moreover, Nissan also used the Renaults Curitiba plant to establish a foothold in Brazil, Latin Americas largest market, and is now building a new factory in Resende; while Renault announces a 200 million investment to expand plant in Curitiba, Brazil. Thus, going for a strategic alliance benefit both companies by allowing them to explore additional areas of potential cooperation.
To Combine expertise and Technology sharing
The collaboration between Renault and Nissan allow them to share from technical expertise and organisational know-how of their partners. For instance, Renault specializes in diesel engines, manual transmissions and as well as in innovation, while Nissan specializes in gasoline engines and automatic transmissions. They also speed time to market by jointly developing engines, batteries and other key components.
To Share resources
Strategic alliance allow the two companies to generate more than 200 million per year by sharing warehouses, containers, shipping crates, seagoing vessels and customs-related processing. In total, the Alliance reported more than 1.5 billion in synergies in 2010. Moreover, sharing platforms and common parts increase economies of scale and reduce development and production costs. Renault and Nissan also share common information systems infrastructure, data centers and licenses. They have also created the Renault-Nissan Purchasing Organization, or RNPO, the Alliances largest common organization which negotiates prices among suppliers on behalf of both Renault and Nissan.
Reinforcing the image of both Nissan and Renault brand
This alliance will strengthen their image in this global world, thus increasing their sales and reputation.
To Invest in Research and development
Nissan Renault Alliance will allow them to invest huge amount of money in Research and Development and pursue new innovation policy. For instance, the Alliance had committed 4 billion (around US$5.2 billion) into its electric vehicle (EV) and battery development programs with the aim to become the leader in zero-emission transportation.
