Business / Corporate

Nissan and Renault unveil steps to cut costs and revamp alliance

Bloomberg

Renault SA and Japanese partners Nissan Motor Co. and Mitsubishi Motors Corp. on Wednesday unveiled steps to standardize platforms further and push for more joint purchasing to reduce costs, with each company focusing on its strengths.

The measures will help deliver savings of as much as 40 percent in model investments for jointly developed vehicles, the companies said. Nissan will focus on autonomous driving, Renault on the body of electric cars and electric powertrains while Mitsubishi Motors will work on plug-in hybrids, they said.

Renault, Nissan and Mitsubishi Motors need each other more than ever now, with the global coronavirus pandemic forcing automakers to shutter showrooms and factories. The industry is also facing a once-in-a-generation shift to electric vehicles and autonomous driving that will require significant investment in technology and filter out losers and winners. After coming under strain last year, the partnership is seeking a fresh start, backed by new measures at the companies to improve profitability.

“The new model focuses on efficiency and competitiveness, rather than on volumes,” Jean-Dominique Senard, chairman of the Alliance Operating Board and Renault, said in an online news conference.

In the past, the partnership focused “too much on expansion,” said Osamu Masuko, chairman of Mitsubishi Motors.

Any plans for a merger between Renault and Nissan, something Ghosn had pressed for, are also off the table, according to Senard. “We are moving forward within the current framework.”

Nissan will lead efforts in China, North America and Japan while Renault will focus on Europe, Russia, South America and North Africa. Mitsubishi Motors will continue its efforts in Southeast Asia, where it already has a strong footprint.

In designating the so-called leaders and followers for projects, the partners are tackling one of the most prickly issues they have faced during the past decades: Infighting and power struggles between French and Japanese engineering teams. The goal is to have half of the car models in the alliance produced under the new operating model, they said.

Nissan is due to announce its own restructuring plan Thursday that will cut costs by ¥300 billion ($2.8 billion) and phase out the Datsun brand, a person with knowledge of the matter has said.

Nissan has been in turmoil since the November 2018 arrest of former Chairman Carlos Ghosn, with an aging car lineup and management paralysis denting its outlook. The automaker warned last month it expects to post a loss for the latest fiscal year through March. The Yokohama-based company also plans to shut down one production line in addition to the recently closed operation in Indonesia and reach the reduced spending target this year by cutting marketing, research and other costs, the person said.

Although Nissan is forecasting a 12 percent decline in sales to ¥10.2 trillion for the just-ended fiscal year, the new mid-term plan calls for a return to revenue of ¥11.5 trillion within three years, with fixed costs kept at reduced levels, the person said.

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