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Renault And Nissan Expected To Scale Down Lofty Global Targets In A New Strategy


05/28/2020


Renault And Nissan Expected To Scale Down Lofty Global Targets In A New Strategy
The last time that Renault SA, Nissan Motor Co and Mitsubishi Motors Corp had announced their combined strategy plan, for their Alliance in September 2017, the auto makers had set their targets at becoming the global leader in the industry by 2022.
 
This time however when the companies outline their strategic plans for the Alliance, it is expected that the lofty goals set would be cut down for survival purposes.
 
"There will be restructuring, there will be fixed costs reductions, there will be a number of projects which will be reduced," said news reports quoting sources with knowledge of the plan.
 
The novel coornavirus pandemic has hit all of the three companies at a time when they were trying to re-strengthen their Alliance and partnership after the turmoil following the arrest and ouster of the former Nissan and Renault boss and the chief architect of the Alliance Carlos Ghosn over charges of financial misconduct at Nissan.
 
All the three auto majors were reporting declining profits that put thousands of jobs will be at risk and separate restructuring plans are expected to be announced by Renault and Nissan.
 
According to reports quoting sources, the new strategy likely to be announced and followed by the three companies will involve more systematic divisions of labour in which one of the Alliance partners will focus on a particular type of vehicle and geography while the others will follow.
 
"The plan will have a positive spirit, based on a clear leader-follower scheme and on complementarity between companies," a source close to Renault was quoted in the media as saying,
 
The Alliance – that is amongst the largest in the world in terms of production capacity, has so far largely not been able to deliver on the promise and to convert the huge scale that they possess into a competitive advantage apart from the joint procurement of parts, because of bickering over cost sharing and capital structures for a number of years now.
 
It is also expected that the French government, which is the largest shareholders of Renault with 15% stake of the company, will ve a more vocal partner of the Alliance.
 
While the French car maker is hoping to secure a 5 billion euros ($5.5 billion) state guaranteed loans in order to tide over the hit to its sale and revenues because of the pandemic, the French government wants the company to focus on make more investments in areas such as electric vehicles, advanced batteries and other technology so that more jovs can be created in the country.
 
One of the issues that the market will look forward in the strategy announcement for the Alliance is the place given to the German automaker Daimler AG within the Alliance. Daimler had joined the Alliance in 2010 and had promised cost savings for future vans, small engines and pick-up trucks. But the four companies have since then announced very few common projects. 
 
Renault, Nissan and junior partner Mitsubishi, have faced several challenges in working together because of stark differences in corporate cultures and palpable strain over the capital structure of the Alliance.
 
(Source:www.businessworld.com)


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