COVID-19: Nissan, Renualt, Mitsubishi join forces to stay afloat

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Renault, Nissan and Mitsubishi Motors will make fewer models, share production facilities and focus on the existing geographic and technological strengths of each carmaker as they try to slash costs and ride out the coronavirus pandemic.

The world’s biggest carmaking alliance said Wednesday that it would abandon the growth at all costs strategy pursued by former boss Carlos Ghosn, whose arrest in 2018 on financial misconduct charges threw the group into disarray.

“The alliance’s new model focuses on efficiency and competitiveness rather than on volumes,” Jean-Dominique Senard, the chairman of Renault, told reporters. “Our aim is to increase the competitiveness and profitability of each of the three companies.”

The new strategy will see each alliance member taking the lead in specific geographies while the others follow. Nissan (NSANF), for example, will lead the way in North America, the Middle East and key markets in Asia including China and Japan. Renault (RNLSY) will take first position in Europe and South America, while Mitsubishi has been assigned parts of southeast Asian and Oceania.

The alliance will apply a similar strategy to technology and engineering. Nissan will take the lead on autonomous driving, while Renault will tackle Android-based connected car technologies. The companies will also reduce the overall number of models they sell, build more cars on shared platforms and design them to use more of the same parts. Renault and Nissan are expected to announce job cuts and plant closures later this week. The two companies have been partners since 1999, cooperating on strategy and product development while never taking the plunge and completing a full merger. Together with junior partner Mitsubishi Motors, the unique alliance employs roughly 450,000 people and in 2018 it sold roughly one in every nine cars around the world.

The companies have so far largely maintained separate manufacturing facilities. But under the new strategy, more plants will produce cars for each brand. In Latin America, for example, two factories will produce Renault and Nissan SUVs.The deepening of the commitment marks a major change: As recently as last year, Renault had been looking outside the alliance to cut costs, holding merger talks with Fiat Chrysler. The Italian-American company went on to agree to a merger with the owner of Peugeot and Citroen, closing off a potential avenue for collaboration for Renault.

The departure of Ghosn, who has denied acting improperly, sparked a series of leadership changes at both carmakers, confusion over their strategy and questions over whether the sputtering relationship had outlived its usefulness. Nissan and Renault, which are linked through a series of equity stakes, in January denied reports that they were breaking up.

Then the coronavirus hit, plunging the alliance deeper into crisis and necessitating a sweeping overhaul.

Nissan will reportedly announce this week that it will reduce its global production capacity by 20% and close a plant in Barcelona. Japanese media reported that Nissan could slash its workforce by 20,000. Renault could also stop making two models in Spain and move that production to Nissan’s massive plant in England, according to the Financial Times.

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