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Renault-Nissan shelve merger plans to salvage long-standing alliance

Renault-Nissan shelve merger plans to salvage long-standing alliance
Renault-Nissan shelve merger plans to salvage long-standing alliance

Renault and Nissan have reportedly shelved plans for a full merger and will focus on resolving the troubled alliance to help recover from the COVID-19 pandemic.

The carmakers are currently planning to repair their alliance that has failed to convert the global scale into a competitive advantage. They are set to reveal the restructuring plans for the mid-term, which can be considered as a peace treaty to fix the long-standing tensions between the companies.

The companies are also focusing on substantial cost-cutting and restructuring activities that could impact many jobs. They will subsequently announce these measures towards the end of May. Before this event, the two companies and Mitsubishi will hold a news conference jointly on 27th May, where they will outline the new ‘leader-follower’ approach philosophy to their alliance. Ashwani Gupta, Nissan’s COO and Jean-Dominique Senard, Renault’s Chairman are the key advocates of the new approach or system.

The crisis faced by both the companies has led to the acceleration of efforts to indulge in collaboration & cost-sharing in product development and technology for 5 years, while preserving the distinctiveness of their brands.

Their alliance has led to an increased output over the years, offering nearly 10 million vehicles in 2017, which is the 1st full year following the joining of Mitsubishi as a partner. Sources familiar with the matter have stated that Nissan engineers produced 40% more output than that of Renault. The relation between the two companies was strained earlier in 2020 to the point where their alliance of 21 years was at the risk of collapse.

Under the new alliance, Nissan could lead the Europe market on the crossover SUVs (sport-utility vehicles), while functioning as a ‘follower’ in small city cars and commercial vans by adopting the versions produced by the French carmaker. The carmakers are also planning to convert the assembly plant into a hub for their SUVs.

The recent effort to save the Renault-Nissan alliance happened during surging global economic protectionism and nationalism levels that pose a high risk to their partnership.

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Omkar Patwardhan

Omkar Patwardhan started his professional career in the hospitality industry. Having nurtured a deep-sated passion for words however, he found his way into content writing and now pens down articles for and a few other websites, spanning the sectors of business, finance, and technology./