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Mitsubishi shifts Renault-Nissan towards global no.1

24 Oct 2016

With the addition of Mitsubishi Motors, the Renault-Nissan alliance is closing in on the level of 10-million vehicles sold per year where automakers vie for the title of biggest manufacturer.

Carlos Ghosn, chairman of Mitsubishi Motors

If Carlos Ghosn, who engineered the turnaround of Nissan which he has managed along with Renault since 2005, insists while the ranking is not the objective, size does matter as it can open up economies of scale that can tip the balance in an industry of thin margins.

At the end of July the two carmakers announced their alliance had produced €4.3bn ($4.7bn) in synergies last year. Since 2014 Renault and Nissan have shared engineering, manufacturing, logistics, purchasing and human resources. They aim to save €5.5bn in 2018.

By 2020 the alliance aims to have 70% of its vehicles built on shared platforms. It is also on the level of the alliance that the strategy for self-driving and connected vehicles is being developed.

These synergies open up the possibility of more savings by cross production. Already two Renault factories in France produce Nissan vans and the subcompact Micra. This maximises use of available facilities and avoids unnecessary investments.

Renault and Nissan, partners since 1999, remain distinct companies even if they are tied by cross-holdings: Renault holds 43.4% of its Japanese partner, while Nissan owns 15% of the French automaker.

From Wednesday, Mitsubishi Motors joins the family thanks to a 34% stake held by Nissan. The stake makes Nissan the leading shareholder in Mitsubishi Motors and Goshn becomes the chairman of the board.

But the alliance runs the gamut from budget brands with Dacia and Datsun to bling with the Infiniti marque.

It also includes the top Russian manufacturer Avtovaz as well as Samsung Motors.

With Mitsubishi, Renault-Nissan jumps into fourth place with 8.53-million vehicles manufactured in 2015.

Japan's Toyota was top last year with 10.15-million vehicles, followed by Germany's Volkswagen at 9.93-million and General Motors of the United States at 9.8-million.

But the enlarged Renault-Nissan alliance could jump to 9.5-million vehicles in 2016 thanks to an increase in sales by Renault, which has benefited from a recovery in the European market and the introduction of several new models.

Mitsubishi brings to the alliance a network of factories and presence in growing southeast Asian nations, a region where Renault and Nissan have not been strongly positioned.

Source: AFP

Source: I-Net Bridge

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