Renault-Nissan’s complicated makeup

November 26, 2018 14:38 CET

The arrest last week of Carlos Ghosn by the Japanese authorities on accusations of financial misdeeds has revealed fissures in the Renault-Nissan-Mitsubishi alliance.

Renault and Nissan (which holds a controlling interest in Mitsubishi) remain separately listed companies, but they are connected by a complicated web of cross-holdings and shared functions, which could be costly and complicated to undo. Nissan executives have reportedly grown increasingly frustrated by what they perceive as a lack of control over their own company.

Ghosn, as chairman of Nissan and Mitsubishi, chairman and CEO of Renault, and chairman of the overall alliance, had been devoting an increasing percentage of his time to ensuring that the alliance, which is set to mark its 20th anniversary next year, would continue after his departure. He had accelerated cross-company functions and released an ambitious five-year plan that would grow sales from 10.6 million vehicles in 2017 to 14 million in 2022 — and develop costly and complicated technologies such as robotaxis.

Here are the main points where the companies converge:

Renault-Nissan BV

This is the Dutch-registered company that creates the alliance’s mid- and long-term strategy, although it has limited decision-making power over the two main partners. Its powers include approval of certain strategic and product plans, deciding which components and vehicles are to be shared, financing policies such as risk management; and the creation of cross company teams. Renault and Nissan each have four members of the alliance board of directors.

Ownership and governance

Renault owns 43 percent of Nissan, which holds 15 percent of Renault shares — and no voting rights on the French company’s board, although it has two members on it. The current power-sharing arrangement dates to December 2015, when the alliance partners and the French government — the largest single shareholder in Renault — agreed to let the state increase its share of Renault to 20 percent to ensure it had double voting rights, what became known as a “blocking minority.” To limit the influence of the French government on Nissan, Renault agreed to hold no more than four seats out of nine on the Nissan board, and approve resolutions proposed by the board for “the appointment, dismissal and remuneration of board members.” The negotiator for the government was Emmanuel Macron, then the finance minister and now president; for Renault it was Carlos Ghosn, and Hiroto Saikawa represented Nissan.

The alliance has combined light-commercial vehicles into a single business unit. The Renault Alaskan pickup shares most components with the Nissan Navara — as well as the Mercedes X class.


The alliance tallies synergies among the partners, which it describes as “cost reductions, cost avoidance and revenue increases” derived from merged operations. Only new, not recurring synergies, are counted. The figure reached 5.7 billion euros in 2017, with a goal of 10 billion euros by 2022. Nonetheless, that would still be well below 10 percent of total alliance revenues. Cross-company revenues that appear on quarterly and annual balance sheets include sales to partners; for the third quarter of 2018, for example, Nissan contributed 384 million euros to Renault’s bottom line.

Shared operations

A favorite of Carlos Ghosn, teams made up of executives among the brands have been overseeing an increasing array of alliance tasks. The main lever to generate synergies is the Renault-Nissan Purchasing Organization, which since 2009 has overseen 100 percent of all purchases across the alliance. A major initiative announced this year has increased the number of cross-company teams to nine, each overseen by an executive vice president. In addition to purchasing, they include engineering, manufacturing and supply chain management, quality, after sales, business development, human resources, light-commercial vehicles, and “CEO office,” to boost synergies and study future convergences.

By 2022, about 70 percent of the alliance’s vehicles will be built on the Common Module Family, or CMF architecture.

Platforms and powertrains

The main architecture is the Common Module Family, or CMF, introduced in 2013, which the alliance says reduces development costs by up to 40 percent and parts costs by up to 30 percent. CMF is less a single platform than a system of interchangeable modules, for almost all sizes of vehicles (by segment, it is known as CMF-A, CMF-B and CMF-C/D). At the moment more than 20 alliance models are based on CMF variants. For Renault, they include the Kwid small SUV for emerging markets, Megane compact hatchback, Talisman midsize sedan and wagon, Espace minivan, and Kadjar and Koleos SUVs.

On the Nissan side, CMF models include the Qashqai/Rogue and X-Trail SUVs, and the Pulsar small hatchback. There is even a Datsun CMF model, the Redi-GO, which is sold in India. The alliance says that by 2020, 70 percent of vehicles — a total of 9 million — will be CMF-based. The alliance says about 75 percent of powertrains are shared across brands.

The Nissan Micra is produced on the same production line as the Renault Zoe and Clio at Renault’s plant in Flins, France.

Cross Manufacturing

Shared facilities include the Renault factory in Flins, France, which makes the Nissan Micra, Renault Clio and Renault Zoe, the Renault-Nissan plant in Chennai, India, where the Renault Kwid and Duster SUVs and Datsun Redi-GO are built, and the Renault-Samsung Motors factory in Busan, South Korea, which makes the Nissan Rogue and Renault Koleos SUVs, among other models. Three pickups, the Nissan Navara, Renault Alaskan and Mercedes X class, are built at Nissan’s factory in Barcelona. A jointly owned facility in Tangier, Morocco, produces mostly Dacia models. This month, the alliance announced plans to produce Renault, Nissan and Mitsubishi vans in northern France.

Market Coverage

The alliance’s 10 brands are sold in a total of 200 countries, but by design, there are some regions that are off-limits to the main alliance brands. Renault has been out of the North American market since the late 1980s, when it sold its share of AMC to Chrysler. Renault’s top five markets are France, Russia, Germany, Italy and China, with significant sales in Latin America; Africa, the Middle East and India; and Europe. Nissan’s top markets, by contrast, are the United States, China, Japan, Mexico and Canada. The only market with significant overlap is Europe, although Nissan sales have been declining sharply in recent years. Mitsubishi’s No. 1 market is Indonesia, followed by China, the U.S., Japan and Australia.

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