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TOKYO – It was a simple plan. Renault and Nissan, two partners of a broad alliance of automakers, would pool their resources to build a new low-cost car on and for emerging markets.
Each company, located in a factory near Chennai, India, would add its own brand and finish, but the platform – the bones of the vehicle – would be the same. Carlos Ghosn, the executive director of the alliance, said shared engineering was needed for French and Japanese companies to thrive in an increasingly competitive industry.
But the two teams – although both led by French engineers – could not agree on a project, said people familiar with the subject. When Nissan cars hit the market in 2014 and Renault cars in 2015, they were different, even at chassis level. Mr. Ghosn was frustrated and disappointed, said one of the interviewees, and considered that the companies ignored his direct instructions.
Today, Mr. Ghosn is being held in a Tokyo jail. And the two leaders who are now at the top of the alliance must find a way to overcome the fierce pride that has fueled the past rivalry of Renault and Nissan and ensure the success of business cooperation.
The new president of Renault, Jean-Dominique Senard, who enjoys a reputation as a savvy negotiator, and Nissan CEO Hiroto Saikawa, who stoutly defended the autonomy of his company.
Renault, which controls Nissan paper, has scrambled in recent weeks to satisfy his partner. Renault joined Nissan to step up legal pressure against Ghosn, who was ousted from the alliance after being arrested in Japan last November on charges of financial misconduct.
The groups created a new board of directors for the alliance last month, which gives equal weight to the Japanese part of the partnership, which includes Nissan and Mitsubishi Motors. And Renault stood aside as Nissan executives decided to dismantle the structures they thought Ghosn used to control the three companies.
Nevertheless, Renault maintains one of the biggest sources of tension at the table: its disproportionate participation in Nissan. It is an irritant for Nissan, which is now bigger and more powerful than the French company that bailed out in 1999.
As the global market for electric cars and autonomous driving grows, Renault needs Nissan's manufacturing power and knowledge of car sales around the world, including the United States.
Maintaining the status quo "causes some instability" in the alliance, said Peter Wells, a professor at the Center for Automotive Industry Research at Cardiff University in Wales. "These arrangements reflected the strengths of these companies at the time they were concluded. But Nissan's position is now stronger than that of Renault. "
Renault, Nissan and Mitsubishi – which together sold 10.76 million cars in 2018 – committed to making their decisions in terms of operations and governance by consensus, canceling the centralized power structure created by Ghosn, which allowed him shots. The joint decision-making approach, which Mr. Saikawa characterized as "decision-making" and "win-win-win", is similar to how the alliance worked when Renault took control of Nissan for the first time.
The new era began Friday in Paris, where the leaders of the three automakers met to consider auto projects and technology to outperform their competitors. Nissan and Mitsubishi board members and executive committees were invited to dinner the night before at a rare dinner with their Renault counterparts in a restaurant at the top of Renault's flagship showroom on the Champs-Elysees. Elysées.
The alliance council, which includes Senard and the leaders of Renault, Nissan and Mitsubishi, plans to meet monthly, alternating between the French and Japanese capitals, to strengthen their cooperation, according to a person who knows the device not allowed to speak in public.
It remains to be seen what will be the effectiveness of the new arrangement on an ultracompetitive automobile market. Mr Ghosn criticized a consensus-based management approach during a videotaped statement last week, suggesting that the alliance would have little chance of succeeding with diffuse leadership.
"For those who say that there are only two options – consensus or dictatorship – it means that they do not know what leadership is," said Mr. Ghosn in the video, published the day after his arrest in Japan, following new allegations of financial threats. misconduct.
Last week, a Tokyo court ruled that Mr. Ghosn would remain in detention until Monday. He denied any wrongdoing and accused Nissan officials of dismissing his ouster, saying they feared linking the company too closely to Renault.
The company's executives say that, regardless of the tensions within the company, Renault and Nissan engineers and designers are working together, particularly on the development of electric vehicles.
"Everyone is working very effectively on operational issues," said Gilles Normand, Renault's senior vice president of electric vehicles, during an interview at the Geneva Motor Show in March. .
Operationally, Nissan is the biggest success. Under the leadership of Mr. Ghosn, the company has reduced costs and focused on creating market share around the world. Last year, its vehicles accounted for nearly half of the alliance's sales worldwide. Nissan manufactures and sells cars in three of the world's largest markets: the United States, China and Japan. Renault has no significant presence in any of them, even if it behaves well in the European Union.
But Renault holds a 43% stake in Nissan, a position it has acquired since 1999, when it saved the Japanese company from bankruptcy. Nissan holds only 15% of Renault's non-voting shares. Mr. Saikawa has repeatedly called for a rebalancing of the shareholding structure, especially after the French government, Renault's largest shareholder, suddenly doubled its voting rights in Renault in 2015. This has aroused in Japan a fear that a foreign government may attempt to influence Nissan.
Renault and Nissan both said the rebalancing was not on the table, at least for the moment. At a press conference at Nissan headquarters in Yokohama last month, Senard said companies should cooperate or disappear.
"We are in a destructive industry," he said. "We will have to be close to each other, because otherwise, if we are alone, we will never succeed."
Consolidation and cost reduction are the order of the automotive industry today. BMW and Daimler announced in March that they would cooperate to develop an autonomous driving technology. Ford and Volkswagen together develop a light van, and analysts expect the partnership to deepen. Fiat Chrysler is openly looking for a partner for the merger.
India was a natural market for Nissan and Renault. Its economy is one of the most dynamic in the world. His middle class aspires more and more to own cars. But consumer demand for low cost cars is forcing companies to look for extremely thin margins that can only be achieved by their size.
After his first disagreements in Chennai, the alliance progressed. In 2017, most of the cars manufactured locally shared the same basic architecture. And partners said that 70% of their vehicles in the world will be based on common designs by 2020.
A former alliance leader said the experience of India was a fall that had not been forgotten. "The two companies were unable to reach a mutually acceptable and beneficial platform sharing agreement, which hurt sales," said automotive industry analyst Kaushik Madhavan, who quickly managed product planning. for Nissan in Chennai.
Today, "both brands have very good models, many of which can potentially be relevant to the Indian market," he said. "But internal quarrels and uncertainty in decision-making affect both brands in India."
Nissan shareholders are still not convinced that companies can work together. At a special meeting held in early April, a participant questioned Mr. Saikawa about a recent disagreement between Renault and Nissan on a hybrid car technology – promoted under the name of e-Power – which has well marketed in the Japanese market. According to Nissan marketing, e-Power integrates a car's gas engine to recharge its high-capacity battery.
If Renault had more control over her partner, she "would have rejected all the things that Nissan wanted to do," the participant said accusingly. "E-Power would never have been made public."
"When one of the partners will have more control or power, that will happen."
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