AutoBeta(AutoBeta.net)05/27 Report--

On May 27th Renault-Nissan-Mitsubishi Alliance announced a series of measures as part of a new business partnership model to improve the competitiveness and profitability of the three companies and save the troubled alliance.

Renault-Nissan-Mitsubishi alliance will adopt the "leader-follower model" strategy, according to the guiding strategy, Renault Group, Nissan and Mitsubishi Motors will respectively focus on the market to avoid duplication. Nissan will focus on China, North America and Japan, Renault Group will focus on Europe, Russia, South America and North Africa, and Mitsubishi Motors will focus on Southeast Asia and Oceania.

Nissan will focus on electric and self-driving technology, Renault will focus on commercial vehicles and diesel powertrain technology, and Mitsubishi Motors will focus on plug-in hybrid technology, cross-border vehicles and small cars.

The model introduction market is also segmented. After 2025, Nissan will lead the model update in the C-level SUV market, and Renault will lead the car update in the European B-class SUV market. In the Latin American market, Class B products will be more rationalized, from four models to one for each of Renault and Nissan, which will be co-produced by Renault and Nissan. In Southeast Asia and Japan, Alliance will seek development opportunities under the same model, such as the cooperation between Nissan and Mitsubishi Motors on the Kei model.

The strategy aims to allay fears of a collapse of the alliance after Mr Ghosn's arrest, thereby building confidence in the development of alliances among suppliers, dealers and consumers. Industry insiders believe that the new strategy will help improve the operational efficiency of the alliance in China and the global market.

The release of the new strategy comes at a time when profits and sales of the three allied companies have fallen sharply. Nissan warned that it expected a net loss in fiscal 2019, the first loss for Nissan in nearly 11 years. Renault's bond rating was downgraded to junk status by S & P in April, and the French finance minister even said: if Renault does not get assistance to cope with the impact of the epidemic, Renault could go bankrupt; Mitsubishi posted a net loss in fiscal 2019, the first loss in 20 years.

The epidemic has led to a sharp drop in demand for new cars, dealer closures, factory shutdowns and supply chain disruptions, which has brought a lot of development uncertainty to the alliance. As a result, the uncertainty of the spread of the epidemic may affect the implementation of the alliance's new strategy, even if the alliance sets new goals for the next few years, even if the epidemic continues to spread, even careful plans will be shelved.

Among the three allied companies, the key to the success of the new strategy lies in Nissan. Nissan is the largest carmaker of the three alliances, the largest in terms of technology and sales, and is seen as the alliance's profit engine. According to the plan, Nissan will devote itself to the development of the three major markets in China, the United States and Japan. Renault officially withdrew from the Chinese market not long ago, reducing the competitive pressure of Nissan in the Chinese market to a certain extent.

But the current situation of Nissan is not optimistic. Hit by the COVID-19 epidemic, Nissan, in addition to closing its plant in Barcelona, Spain, has also begun to reduce production in emerging market countries such as Indonesia, while cutting US factory capacity by 10 per cent. The total number of layoffs is expected to increase to more than 20, 000. Nissan has said it expects an operating loss of up to 45 billion yen ($420 million) and a net loss of 95 billion yen for the fiscal year ending March 2021, based on the impact of the epidemic on the company.

For Nissan's three major markets, Nissan needs to protect the development of the Chinese market, because China is in a state of rapid recovery. Nissan sold 122846 units in China in April, up 1.1 per cent from a year earlier, according to data. From January to April, Nissan sold 329397 vehicles in China, down 29.2% from a year earlier.

At the same time, Nissan needs to revive its business in the US market, which is also one of Nissan's most important markets. Nissan has been trying to make North America the company's profit engine, but at present, the epidemic in the US market is serious, and Nissan's performance continues to deteriorate, which will promote the elimination of equipment, curb sales management fees, and so on. Further cut costs and accelerate the improvement of profitability.

In addition, Nissan will eliminate the Dartsong brand as Nissan cuts operations in Southeast Asian markets (India, Vietnam and Thailand) and cedes those markets to Mitsubishi Motors.

The key to the launch of the new strategy is how to recover from the continuing downturn in the global market. In the face of the current depressed market, the launch of the new strategy of the alliance seems to be somewhat urgent. How to give full play to their respective advantages in the future market competition, how to cooperate and win-win among automobile companies, and how to improve the operating performance of losses? it has become a particularly important issue for the current alliance.

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