The Renault-Nissan-Mitsubishi Alliance

Over the years Motoring Weekly has discussed conglomerates of marques such as British Leyland Motor Company and American Motors Corporation where the parent company swallows several manufacturers to find cost savings by sharing parts and designs. Another way to do this is to have an alliance where the ownership of each entity is still open and where there is no true merger.

The Renault-Nissan-Mitsubishi Alliance is one of these latter structures. With issues around “dieselgate” and then the recent allegations of impropriety laid at the feet of the Chairman, which has resulted in a change of governance structure, it is worth revisiting why the alliance was formed in the first place.

It all started in the late 1990s when the industry was in crisis and manufacturers were looking at ways to improve their financial positions. In 1999 Renault bought 37% of Nissan whilst the Japanese company committed to buying a small chunk of Renault when it had some money. That happened in 2001 when Nissan bought 15% of Renault and the French company increased its stake in Nissan to 44%. A year later another company was formed with a 50/50 ownership: Renault-Nissan BV in the Netherlands. This was an oversight company looking into areas of governance, strategy and IP sharing.

Over the years the Alliance has increased the knowledge sharing to a point where products are jointly developed and production methods have been standardised – all good ways to help reduce the costs of delivering new products to the global market. Indeed like many conglomerates and alliances of past years, badge engineering took hold with Nissan models being badged as Renault in Europe and Renault models becoming a Nissan in other markets. Components were also shared – this can be a huge saving for any alliance and in this case diesel engines were built for the alliance by Renault and used in Nissan vehicles.

Further technology alliances were signed with Daimler and to a smaller degree with Ford for specific vehicle development. With Ford having a similar tie-up with Volkswagen, it is not difficult to see why so many parts are interchangeable!

In 2017, Nissan bought 34% of Mitsubishi Motors and through that transaction brought them into the alliance to help them save costs and provide the other companies with some fresh input. When the alliance was formed, Renault was in relatively good shape and Nissan was almost a basket case, now however the tables have turned over and Nissan is the financially dominant partner, however as Renault holds the biggest voting block, they still have a sizeable control over the alliance business. However, the biggest investment partner in Renault is actually the French Government and so they can influence the voting in the alliance!

By 2017, one in every nine vehicles sold worldwide came from this alliance, so it looks like it was a fairly robust agreement and they have become the largest automotive manufacturing group in the world. That is without a halo marque in the group and the analysts really considered them to be a “Steady Eddie” rather than a Speedy Gonzalez. That isn’t a bad thing in todays market where the dynamics are rapidly changing with China grabbing more and more sales.

In 2017, The Economist magazine was citing the Alliance as a remarkable example of how car companies could work together to produce vehicles that sold well and the partners in the alliance could share ongoing costs. Up until late 2018, the three manufacturers and the alliance shared a Chairman: Carlos Ghosn.

There will be another article published soon about the splitting of that role into a number of distinct positions handled by different people. As a teaser, the changes appear to have had a conception a few years ago when Nissan demanded a share of the voting block which the French Government rejected and promptly set up an agreement with Ghosn to start a full merger of the partners that ultimately would have brought the Japanese under French control! That seems to have been a catalyst for some extraordinary developments that surfaced late last year.

As an aside, the car in the image is a classic Renault 4 – the vehicle that I learnt to drive in, completely with umbrella handle shaped gear lever!