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Here's what the new Renault-Nissan Alliance plan means

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Here's what the new Renault-Nissan Alliance plan means | Top Gear

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It's been under strain for a while now, but a new plan hopes to patch it all up and move on

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Here's what the new Renault-Nissan Alliance plan means

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It's been under strain for a while now, but a new plan hopes to patch it all up and move on

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It's been under strain for a while now, but a new plan hopes to patch it all up and move on

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Here's what the new Renault-Nissan Alliance plan means

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Here's what the new Renault-Nissan Alliance plan means

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Here's what the new Renault-Nissan Alliance plan means

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It's been under strain for a while now, but a new plan hopes to patch it all up and move on

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The Renault-Nissan Alliance, a quarter-century old now, has been under a lot of strain over the past couple of years. So much so that in recent weeks there had been rumours of a likely total split. But today the parties agreed a plan to patch up and move ahead.

Now, Nissan will hold 15 per cent voting shares in Renault, and Renault 15 per cent in Nissan. Also both parties will hold two seats on each others' management boards. Mitsubishi will also remain involved, sharing platforms and purchasing.

All this co-operation is extremely important for all three companies. They had synergies before – the Micra and Clio share a platform, the Qashqai and Austral another, the Megane and Ariya a third.

But from now on there will be new effects. In Europe Nissan will get its new all-electric Micra made by Renault (it shares much with the R5) at much lower cost, and so lower price for the buyers. They say they'll work on a new 800V electrical system for rapid charging – Nissan is already well-developed in prototype solid-state batteries.

They'll share a new EV charging network in Europe. Nissan will join Renault's recycling venture, which will grow critical mass once all of those Leafs out there begin to hit end-of-life.

New joint cars in Latin America and Mexico, and in India, will appear too.

It's worth looking at why things went so wrong. The Renault-Nissan Alliance began in 1999, an era of 'merger-mania' in the car biz. Nissan was deep in financial woes, so Renault bought a share relatively cheaply. It sent to Japan its famed executive Carlos Ghosn, who cut costs, invested in new cars and turned Nissan around.

This let Nissan afford to buy some Renault shares: 15 per cent of the company. By that time Renault had 43 per cent of Nissan. But those stakes were non-voting, and there were all sorts of other legal complications.

Ghosn's dream was a continual deepening of the Alliance. He figured sharing engineering and production methods was critical. But he also reckoned a full merger was unlikely, because all car companies have their own cultures and disrupting them can be perilous. He also managed to part-fold Daimler-Mercedes into the Alliance for a time, and later Mitsubishi.

Once Ghosn, widely admired in Japan, was imprisoned in Japan for alleged corruption in November 2018, cracks in the Alliance were showing. (You'll remember he escaped to his home in Lebanon, secreted onto a plane in one of those big audio cases used by touring bands.)

From the Japanese side, the Alliance looked unfair: because of its bigger 43 per cent shareholding Renault pocketed more Nissan profit than vice-versa.

So another part of the new arrangement is that Renault will lock up those excess Nissan shares above 15 percent in a trust where it doesn't vote, so it can't boss Nissan around.

The sides have also set up a system so the patents and IP each side holds are carefully allocated in a way both agree on.

Essentially, the bosses of each of the three companies say their strategy is to look after their own houses. Renault will do its best for Renault (and Alpine, Dacia, Lada, and Samsung Motors in Korea), Nissan for Nissan and Mitsubishi for Mitsubishi. The new deal gives them a framework where they've got access to shared resources, but can focus on their own strategies.

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The Renault-Nissan Alliance, a quarter-century old now, has been under a lot of strain over the past couple of years. So much so that in recent weeks there had been rumours of a likely total split. But today the parties agreed a plan to patch up and move ahead.

Now, Nissan will hold 15 per cent voting shares in Renault, and Renault 15 per cent in Nissan. Also both parties will hold two seats on each others' management boards. Mitsubishi will also remain involved, sharing platforms and purchasing.

All this co-operation is extremely important for all three companies. They had synergies before – the Micra and Clio share a platform, the Qashqai and Austral another, the Megane and Ariya a third.

But from now on there will be new effects. In Europe Nissan will get its new all-electric Micra made by Renault (it shares much with the R5) at much lower cost, and so lower price for the buyers. They say they'll work on a new 800V electrical system for rapid charging – Nissan is already well-developed in prototype solid-state batteries.

They'll share a new EV charging network in Europe. Nissan will join Renault's recycling venture, which will grow critical mass once all of those Leafs out there begin to hit end-of-life.

New joint cars in Latin America and Mexico, and in India, will appear too.

It's worth looking at why things went so wrong. The Renault-Nissan Alliance began in 1999, an era of 'merger-mania' in the car biz. Nissan was deep in financial woes, so Renault bought a share relatively cheaply. It sent to Japan its famed executive Carlos Ghosn, who cut costs, invested in new cars and turned Nissan around.

This let Nissan afford to buy some Renault shares: 15 per cent of the company. By that time Renault had 43 per cent of Nissan. But those stakes were non-voting, and there were all sorts of other legal complications.

Ghosn's dream was a continual deepening of the Alliance. He figured sharing engineering and production methods was critical. But he also reckoned a full merger was unlikely, because all car companies have their own cultures and disrupting them can be perilous. He also managed to part-fold Daimler-Mercedes into the Alliance for a time, and later Mitsubishi.

Once Ghosn, widely admired in Japan, was imprisoned in Japan for alleged corruption in November 2018, cracks in the Alliance were showing. (You'll remember he escaped to his home in Lebanon, secreted onto a plane in one of those big audio cases used by touring bands.)

From the Japanese side, the Alliance looked unfair: because of its bigger 43 per cent shareholding Renault pocketed more Nissan profit than vice-versa.

So another part of the new arrangement is that Renault will lock up those excess Nissan shares above 15 percent in a trust where it doesn't vote, so it can't boss Nissan around.

The sides have also set up a system so the patents and IP each side holds are carefully allocated in a way both agree on.

Essentially, the bosses of each of the three companies say their strategy is to look after their own houses. Renault will do its best for Renault (and Alpine, Dacia, Lada, and Samsung Motors in Korea), Nissan for Nissan and Mitsubishi for Mitsubishi. The new deal gives them a framework where they've got access to shared resources, but can focus on their own strategies.

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It's been under strain for a while now, but a new plan hopes to patch it all up and move on