Renault-Nissan-Mitsubishi Split Up Their Markets
Renault, Nissan and Mitsubishi are expanding a “leader-follower” scheme to manage their regional marketing and global product development programs.
Their goal is to squeeze more value out of their 21-year-old alliance by replacing parallel engineering and marketing activities with the most competitive approach among all three partners.
Bringing Out the Best
Alliance and Renault Chairman Jean-Dominique Senard says the overhaul will ”bring out the most of each company’s assets and performance capabilities, while building on their respective cultures and legacies.”
He says the greater level of integration is “absolutely essential” to the alliance, whose member have been foundering financially. A few years from now, Senard declares, the alliance will be the world’s most powerful partnership.
The alliance hasn’t explained how its partners will avoid the inevitable competition among themselves over whose solutions are “best.” Or avoid brand dilution with lookalike products. But there’s a solid economic argument for at least trying to pick one option and rally around it.
Integrating operations has been underway at the alliance since Renault and Nissan created the partnership in 1999 to do just that. (Mitsubishi, which is controlled by Nissan, joined in 2017.)
The partnership says it used the leader-follower technique—which sounds suspiciously like badge engineering—to develop its current lineup of light-duty commercial vehicles. Mass-market carmakers (think General Motors) have been doing this for decades: selling multi-brand variants of vehicles largely engineered by one branch of the enterprise.
Nissan and Mitsubishi Motors say they applied the concept to develop their specialty “kei” minicars (the Nissan Dayz and Mitsubishi eK Wagon) for the Japanese market. As with commercial vehicles, being able to rebadge another brand’s work can reduce development costs, reduce parts counts and simplify production logistics.
The partners figure that expanding the leader-follower approach could one day slash their combined vehicle program investments by 40% from current levels.
In the realm of marketing, Nissan is now the “reference” leader in North America, China and Japan. As such, Nissan will call the shots on how member products are presented in those markets.
Similarly, Renault will take the point in Europe, Russia and South America. Mitsubishi will lead the other two partners when it comes to marketing vehicles in southeast Asia and Oceania.
The companies say the choice of who leads in what regions has come through a process of gauging the relative competitiveness of each partner in each specific market.
Coordinating Future Products
This is where avoiding duplication makes the most obvious sense. The alliance says it will apply the leader-follower concept from now on as each partner updates its product portfolio. Half their models will be developed this way by 2025, according to the companies.
Renault will head future compact SUV programs in Europe. Nissan will lead global product development for midsize SUVs.
In Latin America, the alliance plans to replace four current B-segment platforms with a single chassis. Renault and Nissan models that share the platform will be built together in two plants in the region.
What about the Cross-Platform Stuff?
Powertrains, driver-assist electronics and robotic driving systems will get the same all-for-one, one-for all treatment.
Nissan will head autonomous-driving development for the alliance. Renault will spearhead Android-based connected-car programs and core electronics for electric vehicles. Mitsubishi will head work on plug-in hybrid systems for C and D segment vehicles.
As the alliance expands applications for its CMF modular platform, Renault will lead work on A- and B-segment vehicles; Nissan will do the same for EVs that employ the platform.
Will It Work?
Too soon to tell. But the alliance definitely needs to take bold action to reverse the sagging sales and profits at Renault and Nissan.
It’s been a steady skid since Carlos Ghosn, then chairman of the alliance and all three of its members, was arrested on charges of financial misdeeds at Nissan. Recriminations, suspicions about the motives of the partners and collapsing sales and profits soon followed.
Digging out of that hole has been made considerably tougher, thanks to the coronavirus pandemic. Some observers say Renault, Nissan and Mitsubishi need the power of partnership now more than ever. The trick will be to deliver results through a plan that’s all about team performance.
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