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Daimler, Renault and Nissan to announce alliance today

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Daimler, Renault and Nissan to announce alliance today

BY MARK PHELAN

FREE PRESS COLUMNIST

Some folks aren't cut out to be married, but they keep trying. You can spot them by the trail of ruined relationships. Others make missteps, then find the right partner and settle into a blissful relationship.

The alliance Daimler, Renault and Nissan are to announce today could go either way. Detroiters will be watching closely. Previous failed alliance attempts by the automakers wreaked varying degrees of havoc on General Motors and Chrysler. The trio's Mercedes-Benz, Nissan, Renault and Infiniti brands compete with all three Detroit-based automakers and Chrysler's new partner, Fiat, so the alliance will affect jobs and businesses in Detroit.

The deal is expected to see the automakers take a small symbolic shareholding in one another. They plan to share the cost of developing small cars and purchasing, which could save billions of dollars.

If this sounds at all familiar, perhaps it's because Daimler made the same promise in its "merger of equals" with Chrysler. That venture ended up costing Daimler billions of dollars and nearly destroyed Chrysler.

Or perhaps it's because Renault has been pursuing savings through shared purchasing since its failed 2006 attempt to merge with General Motors.

Neither Daimler nor Renault has proven to be an ideal partner in the past. Daimler is a serial collaborator. Its failed alliances include Chrysler, Mitsubishi and Hyundai.

Renault had a long relationship with Volvo that never did much for either automaker. The French company's alliance with Nissan has worked well, but that's in part because Renault is running the show.

"There's a natural tendency for each company to want to be in charge," said Jim Hall, managing director of 2953 Analytics.

Billion-dollar savings won't happen unless the companies are willing to relinquish control of engineering decisions that define the vehicles they sell.

If Daimler does that, it may finally make money on its struggling small-car business -- Smart and the Mercedes A-class and B-class -- thanks to Renault's sales volume and expertise in small cars. If Mercedes can't surrender that much control to another company's engineers, the deal is no more likely to succeed than DaimlerChrysler did.

Mercedes' executives couldn't manage that level of intimate cooperation with Chrysler, a company they owned. Can they do it with a direct competitor like Infiniti?

The answer to that may show whether the companies were meant for each other or will one day go their separate ways.

link:

http://www.freep.com/article/20100407/COL14/4070358/1331/business01/Daimler-Renault-and-Nissan-to-announce-alliance-today

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Officially Official: Renault-Nissan and Daimler announce alliance

by Sam Abuelsamid (RSS feed) on Apr 7th 2010 at 7:54AM

Renault-Nissan CEO Carlos Ghosn and Daimler AG chairman Dieter Zetsche sign the agreement

At a news conference in Brussels, Belgium this morning, Daimler AG and the Renault-Nissan alliance officially announced that the three automakers would collaborate on future products and that each would exchange shares in the other companies. The deal has been rumored for months, and Daimler has been looking for a partner to help spread the costs of small car development for years.

Under the new agreement, Daimler will hold a 3.1-percent stake in Renault and Nissan and the existing alliance partners will hold an identical stake in the German company. The partners will develop a combined platform that will be used as the basis for the next generations of the Renault Twingo and Smart cars, including a new four-seater. These new models will launch in 2013 and the current Smart factory in France will continue building the two-seat version. The new four-seater, along with the Twingo, will be built at a Renault factory in Slovenia. All three vehicles will be available from launch in gas, diesel and electric drive variants.

The automakers will also share powertrains for other models. Renault-Nissan will provide small gas and diesel engines to Daimler for use in its smaller cars, including presumably the next generation A, B and perhaps even C-Class Mercedes-Benz models. Going the other way, Daimler will provide some of its engines to Nissan for use in Infiniti models. The partners will also collaborate on light commercial vehicles, with Renault providing a new entry-level van to be sold as a Mercedes.

link:

http://www.autoblog.com/2010/04/07/officially-official-renault-nissan-and-daimler-announce-allianc/

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Renault-Nissan, Daimler announce alliance for small cars, powertrains

Hans Greimel

Automotive News Europe -- April 7, 2010 09:16 CET

TOKYO – Daimler AG, Renault SA and Nissan Motor Co. announced a global alliance today that sees the automakers swapping stakes in each other and cooperating on the development of small cars, commercial vehicles and future powertrains.

Under the agreement, Daimler plans to take a 3.1 percent stake each in Nissan and Renault, while Nissan and Renault will each take a 1.55 percent stake in the German carmaker.

The move is part of a push by Renault-Nissan CEO Carlos Ghosn to broaden cooperation with other automakers, drive down costs and share the burden of developing new technologies to meet stricter emissions regulations. The three-way partnership follows similar tie ups between Fiat S.p.A. and Chrysler Group LLC and between Volkswagen AG and Suzuki Motor Corp.

Renault and Nissan have an alliance dating to 1999 that is often termed one of the auto industry's few successful cross-shareholdings.

“In the area of new technologies, demands from regulators and consumers are intense and unrelenting,” Ghosn said at a news conference in Brussels, Belgium, that was broadcast over the Internet. “We have to continue to develop a wide range of new technologies to stay relevant and competitive, and the investments required on the front end are significant.”

Synergies and shared projects

Daimler CEO Dieter Zetsche said his company could tap new synergies through the deal.

“Our skills complement each other very well,” Zetsche said in a release.

“Right away, we are strengthening our competitiveness in the small and compact car segment and are reducing our CO2 footprint – both on a long-term basis.”

Ghosn said the Daimler tie up will generate 2 billion euros in cost reductions and new revenue for the Renault-Nissan alliance over the next five years.

Zetsche said Daimler would reap similar synergies. Speaking at a press conference, he dismissed suggestions the deal might turn sour, like the ill-fated merger of Daimler and Chrysler. He said the Chrysler deal flopped because it failed to pinpoint shared projects.

He called the 3.1 percent cross-holdings in this case merely “symbolic.”

“When we came together with Chrysler, we were in agreement about the merger, but we hadn't thought much about the content of collaboration,” Zetsche said. “Here it's very different. We have worked together on very specific projects for a number of months now.”

Among the new projects is a focus on developing small cars, including the next-generation Smart ForTwo and the Renault Twingo, the companies said. Those models will be launched in 2013 onward and be offered with full-electric drivetrains from their debut.

Engine swaps

It will also target sharing and co-development of three- and four-cylinder diesel and gasoline engines from the Renault-Nissan side to be used in those vehicles.

Meanwhile, Nissan's luxury Infiniti brand will get four- and six-cylinder gasoline and diesel engines from Daimler, maker of Mercedes-Benz vehicles. Ghosn said this will strengthen the Infiniti line up in the United States, China and emerging markets.

“This cooperation is going to allow Infiniti to grow faster,” he said.

The companies will also collaborate on light commercial vehicles, they said. Renault will provide a new entry-level van that will be the base for a new Mercedes-Benz van planned for 2012. Daimler also will purchase diesel engines from Renault-Nissan for its vans.

Ghosn and Zetsche said neither company planned to increase the shareholdings beyond the 3.1 percent stakes announced April 7. Ghosn called the share swap a motivational tool.

“The cross shareholding is a lever to give a signal inside the company to cooperate,” Ghosn said. “It's not short term; it's going to be long term. Please open up the books and exchange your know-how.”

Read more: http://www.autonews.com/article/20100407/ANE/304079980/1193#ixzz0kQTWCsCw

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Ghosn talks about Daimler deals

Carlos Ghosn, chief executive of alliance partners Renault SA and Nissan Motor Co., has concluded a series of accords with Germany's Daimler AG ranging from engine-sharing to the joint development of subcompacts.

Renault-Nissan and Daimler are sealing the deal -- and hinting at potentially closer cooperation -- by taking 3.1 percent stakes in each another.

Ghosn spoke with The Detroit News about the new partnership.

Q: How did the talks begin? Were you and Daimler focusing on a specific project, or did you have an alliance in mind from the outset?

A: It started with Daimler looking for a partner on the next Smart car project. They wanted a better, more profitable product. This is the way that they approached Renault about a year ago.

Q: You like to have cross-holdings with your partners. Why is that important to you?

A: When you have a cooperation limited to a particular engine or car, I don't think you need anything but a good contract.

That's at one end of the scale. At the other end of the scale, you have alliances where cross-shareholdings are very important because they give everybody the sense that we're here for the long run.

This is neither a specific cooperation nor an alliance, like what exists between Renault and Nissan. It's something in between that we call a strategic cooperation.

But for a strategic cooperation, it's very important to have a cross-shareholding so that the people in each company have the sense that this is a lasting relationship, not just a contract. We need to open up to the partner and make sure every project is successful.

It would be difficult to encompass all the areas of cooperation (in the agreements) and have good collaboration if there was skepticism about the longevity of this. That's why we thought a cross-shareholding, even in a very limited amount, would be the right signal and would persuade everybody that this is here to stay.

Q: Car companies are strapped for cash today. But if cash were more plentiful, what would be the optimal cross-holding in your view?

A: I don't think you can say what would be optimal from the beginning. If, four or five years down the road, we discover that there aren't a lot of synergies to develop, optimal would be zero.

But if there are a lot of ideas, and we're developing synergies and cooperating, then we'd see if it made sense to go higher.

For the moment, we have an agreement, and we have to deliver on it.

There are massive synergies on the table. We estimate that the net present value of the synergies for the Renault-Nissan side over a five-year period won't be far from 2 billion euros ($2.6 billion).

It's a substantial amount of money coming from synergies with a company that doesn't compete much against us. One of the beauties of this agreement with Daimler is that we have someone who's in the car industry but doesn't overlap with our product lineup or our business.

Q: Of all the agreements announced today, which are the most significant?

A: The most significant in terms of potential for synergies would be powertrain. It would represent the biggest block of the synergies, and lot of exchanges of technology.

Q: What was the hardest part of the negotiations?

A: I think the most difficult part (pauses) -- I'm thinking about this, which means it's not obvious because this negotiation wasn't particularly difficult. That's probably because there were specific projects of mutual interest, and because we share a common analysis of the car industry -- that you're going to see more and more consolidation, and more and more collaboration.

If I have to pinpoint one element, it was the intention of each company to make sure that this cooperation wouldn't have a negative impact on its brand image or identity. We needed to be careful in dealing with this.

Q: Would you still like a North American partner?

A: If the opportunity comes, and if it continues to make sense for us, which is still the case, I don't see anything in this agreement that would be an obstacle.

As long as we know that the name of the game in our industry is scale, yes, it makes sense.

The limit to this is the complexity you're creating, and how you can manage this complexity in the organization.

With what we're doing today, the scale of the cooperation is going to be above 7 million cars a year. Now we are in the two or three largest groups in terms of scale so for us, scale isn't an issue. But for as long as you can create collaborations and make scale play to your favor, you should continue to do it.

Q: How do you see the industry in five or 10 years?

A: I think you're going to have two or three very large groups made up of associations of different brands. There's a place for small players, but they're going to be niche players in particular products or markets.

But if you want to be a global carmaker and be competitive, you'll have to build up scale.

You need to make huge investments that will be impossible for a medium-sized carmaker to make. So you have to move up, and if you can't do it by yourself, you have to join hands with somebody to share these costs.

From The Detroit News: http://www.detnews.com/article/20100407/AUTO01/4070427/1148/Ghosn-talks-about-Daimler-deals#ixzz0kRYw3Aw7

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