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Renault, Nissan facing big questions - GlobalData

Renault, Nissan facing big questions - GlobalData

Mubasher: The alliance between Renault and Nissan is facing mounting challenges with rising tensions, anticipation regarding the Carlos Ghosn case, and the once possible merger deal now off the table, according to a recent report by GlobalData.

The two automobile manufacturing giants will be aware of the difficulties involved in separating out their existing joint activities and operations, according to David Leggett, Automotive Editor at GlobalData.

"The alliance has delivered substantial benefits to its participants over many years in engineering savings, supply-chain leverage and scale economies. Annual cost savings are in excess of €5bn, with €10bn a year targeted, helped by the 2017 addition of Mitsubishi to the club,” he noted.

Both Renault and Nissan clearly need to set their strategic direction and the status of their alliance will be at the heart of that. “If they do split, then they each need to have a strategy for a competitive response that compensates for the lost alliance cost savings,” Leggett noted.

Nissan has particular problems in turning around its losses and recovering share and margin in North America. Meanwhile, Renault is facing extremely competitive conditions in the European car market. Both are subject to rising pressures on all companies in the auto industry, especially rising investment commitments in costly advanced technologies such as electrification,” he further added.

The note further pointed to the need for clarity on how the alliance’s future, saying it will be a top priority for Renault's new permanent CEO, expected to be named in the coming days.