GlobalData : Renault-Nissan Alliance needs re-set, says GlobalData

09 Oct 2019
Renault-Nissan Alliance needs re-set, says GlobalData Posted in Automotive

Following the recent news that Renault's board is planning to discuss CEO succession;

David Leggett, Automotive Editor at GlobalData, a leading data and analytics company, offers his view:

'Rumours are swirling in France that Renault is to consider the question of succession to the current CEO at an upcoming board meeting. This could reflect stakeholder frustration that Renault's strategic direction remains unclear with the Renault-Nissan-Mitsubishi Alliance effectively on hold in the wake of Nissan's current difficulties and a proposed Fiat-Chrysler merger that was rejected.

'The Alliance has delivered substantial benefits to its participants over many years in engineering savings, supply-chain leverage and scale economies. However, the formal relationship - in particular cross-shareholdings between Renault and Nissan were formed many years ago - and the perceived imbalance in the power share is at the heart of political pressures and tensions that culminated in former Nissan chairman Carlos Ghosn's ignominious downfall.

'Both companies need to set their strategic direction with effective leadership from their CEOs paramount.

'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.

'The two companies would be ill-advised to lose the benefits from their Alliance, but there is a clear need for clarity on if and how the Alliance can continue and how it can continue to benefit the business growth strategies of its participants.'