Renault, Nissan, Daimler in alliance to strengthen hold on car markets

08:14, April 08, 2010      

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Carmakers Renault, Nissan and Daimler entered wide-ranging alliance on Wednesday, aiming to strengthen their hold on markets amid fierce competition and signaling a new wave of partnership in the car industry.

Under the deal, Renault and Nissan, which has already been in strategic cooperation for 11 years, will take a 1.55 percent stake respectively in the German carmaker Daimler, while Daimler will take a 3.1 percent stake in each of the other two partners.

However, the cross holding of shares was largely symbolic. The essence of their alliance was to develop small cars jointly and share gasoline and diesel engines.

Speaking at a joint news conference following a signing ceremony in Brussels Wednesday, Daimler chief executive Dieter Zetsche said that rising demand for small cars was a key driver behind the alliance.

"Since the small and compact vehicle segment is so highly competitive and price sensitive we also need to have the right cost structure," he said.

Rising fuel prices have forced more customers to buy energy- efficient small cars, which holds great potential for automobile giants, but profit margin of the small cars such as Renault's Twingo and Daimler's Smart are usually thinner than luxury models. By sharing technology and manufacturing platforms, the three car makers would effectively reduce costs and improve competitiveness.

The alliance would see three car makers cooperate on the next- generation Smart Fortwo and Twingo, including electric versions, as well as on expanding the Smart and Twingo families. A new Smart four-seater and the next-generation Twingo will be engineered on the basis of a jointly developed architecture, with the launches of the jointly developed models planned for 2013 onwards.

"Right away, we are strengthening our competitiveness in the small and compact car segment and are reducing our CO2 footprint, both on a long-term basis," Zetsche said.

They will also share and co-develop diesel and petrol engines to be used in the new Smart and Twingo models, which will be adapted and modified for a new generation of premium compact cars for Daimlers' Mercedes-Benz. Daimler will provide its petrol and diesel engines for Infiniti, the luxury division of Nissan.

In the field of light commercial vehicles, Mercedes-Benz Vans will expand its portfolio to offer an all-new entry-level, intended for commercial usage, from 2012 onwards. The technical basis of this van will come from Renault and will be produced at the Renault plant in Maubeuge, France.

It was estimated that by pooling together their technology and resources, the Renault-Nissan alliance and Daimler would benefit from the scale effect, with two billion euros (2.7 billion U.S. dollars) to be achieved in cost savings and additional sales over the first five years for each side.

Zetsche said the alliance would seek to expand their cooperation beyond the currently agreed areas.

"Right away we are strengthening our competitiveness in the small and compact car segment and are reducing our CO2 footprint, both on a long-term basis," Zetsche said.

We "will work together to examine further possible areas of cooperation," he added.

But Zetsche ruled out the possibility that the alliance would develop into a full merger like Daimler's ill-fated acquisition of U.S.-based carmaker Chrysler, which ended in 2007.

"At this point in time there is no thought of going further," Zetsche said.

Renault chief executive Carlos Ghosn said the new alliance was just the latest step of the French carmakers' consolidation strategy.

"The name of the game is to be present everywhere," Ghosn said, "so we are going to move for more and more consolidation."

"Do not be surprised if we continue to add scale," he said.

Analysts said faced with slump sales due to the economic crisis and increasing fierce competition, the automobile industry may see a new wave of partnership among different car makers to help each other boost their competitiveness.

Renault entered an alliance with Nissan in 1999 and now holds around 44 percent stake in the Japanese car maker. With 6.1 million units sold in 2009, the alliance ranked the world's fourth largest car maker. The expanded partnership with Daimler would add 1.6 million to the total sale last year.

"This agreement will extend our strategic collaboration and create lasting value for the Renault-Nissan alliance and Daimler as we work on broadening and strengthening our product offering, efficiently utilizing all available resources and developing the innovative technologies required in the coming decade," Ghosn said.

Source: Xinhua


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