Executive Summary

Renault-Nissan-Mitsubishi Alliance sold an estimated 10.6 million passenger vehicles and light
commercial vehicles (LCVs) in 2017, making them the best-selling automotive group in the world. Such an
achievement stems from the Alliance's commitment to driving maximum synergies out of the
collaboration, while enabling the individual brands involved to retain their distinct identities and realise
sustained revenue growth over the years.Renault has sold more than 3.76 million vehicles in 2017,
establishing a strong presence in emerging markets such as Russia, India, Iran, Turkey, and Brazil. Nissan
sold more than 5.8 million vehicles, whereas Mitsubishi (in which Nissan has a controlling stake) racked
up sales of 1 million in vehicle, with China and the US being the largest markets for all companies.

Renault and Nissan have been able to generate strong synergies over the years in a lot of spheres like
purchasing, engineering, and manufacturing.

Some of their achievements are:

A. Purchasing: Since 2009, the Renault-Nissan Purchasing Organisation (RNPO) has been responsible for
100% purchase of all Alliance purchases. The convergence of platform, powertrain, and component
development has helped RNPO generate very high economies of scale over the years for the Alliance.
B. Engineering: The joint development of a modular vehicle platform “Common Module Family (CMF - is
aimed at reducing manufacturing costs.
C. Manufacturing: In emerging markets like Russia, India and Brazil, the Alliance has been able to work in
unison to boost market penetration. In 2010, the first joint manufacturing facility was set up in India, to
manufacture Renault, Nissan and Datsun vehicles for all models.
D. LCV: Renault who also manufactures for Fiat and Nissan, has a very strong presence in the global van
market, while Nissan has a light truck business unit. The LCV unit was “spin off” into a separate business
unit in 2017 aiming to grow LCV sales worldwide.

About Renault-Nissan-Mitsubishi:

Group Renault, Nissan Motor and Mitsubishi Motors represent the world’s largest automotive alliance of
recent times. It is the longest-lasting and most productive cross-cultural partnership in the automobile
industry. Together, the partners have sold more than 10.6 million vehicles in nearly 200 countries around
the world in 2017. The member companies have focused on collaboration and maximizing synergies to
boost competitiveness. They have critical strategic collaborations with other automotive groups,
including Germany’s Daimler and China’s Dongfeng. Renault Nissan Mitsubishi strategic alliance is the
industry leader in zero-emission vehicles and is developing the latest advanced technologies, with plans
to offer autonomous drive vehicles, connectivity features and services on a wide range of affordable
vehicles.
ALLIANCE SO FAR

The Alliance began on 27th March 1999. At the time, the auto industry was going through a period of
rapid consolidation. Numerous companies merged or were acquired in high-profile deals, most notably
Daimler's acquisition of Chrysler in 1998.
Initially Renault bought 36.8 percent of Nissan's outstanding stock and Nissan vowed to buy into Renault
when it was financially able. In 2001, after the company's turnaround from near-bankruptcy, Nissan
bought a 15 percent stake in Renault, which in turn increased its stake in Nissan to 44.4 %.
In 2006, the Alliance began exploratory talks with GM (General Motors) regarding the possibility of
creating an industrial alliance. The talks were instigated by Kirk Kerkorian (GM minority shareholder). GM
reportedly demanded payment of several billion dollars to engage in an alliance, prompting Ghosn to call
the terms "contrary to the spirit of an alliance." Discussions ended without agreement in October 2006,
when Ghosn said, "It's clear the two sides have completely different appetites for an alliance.”
Since 2010, the Alliance has undertaken a number of projects as part of a strategic cooperation deal with
the German Daimler AG company.
In 2014, Renault and Nissan combined various R&D , manufacturing and business operations to increase
money savings, integrate the two companies and accelerate the development. In September 2017, the
Alliance announce its Alliance 2022, a six-year plan that has set a new target to double annual synergies
to €10 billion by the end of the plan.

ALLIANCE 2022

Carlos Ghosn, chairman and chief executive officer of the Alliance, said:

“Today marks a new milestone for our member companies. By the end of our strategic plan Alliance
2022, we aim to double our annual synergies to €10 billion. To achieve this target, on one side Renault,
Nissan and Mitsubishi Motors will accelerate collaboration on common platforms, powertrains and next
generation electric, autonomous and connected technologies. From the other side, synergies will be
enhanced by our growing scale. Our total annual sales are forecast to exceed 14 million units, generating
revenues expected at $240 billion by the end of the plan.”

Renault, Nissan & Mitsubishi motors to strengthen cooperation and accelerate use of common platforms,
powertrains & new technologies.

Objectives of the Alliances are as follows:

- Produce more than 9 million vehicles which would be sharing four common platforms

- Increase the proportion of common powertrains from a third to three-quarters of total volumes.

- Acquire additional synergies which are expected from electrification, connectivity and autonomous
technologies.

- Launch Twelve (12) pure electric models, utilizing common EV platforms and components.

- Launch Forty (40) vehicles with autonomous drive (AD) technology

- Quality as an operator of Robo-vehicle ride-hailing services.

Alliance 2022 has set a new target to double annual synergies of the alliance to €10 billion by the end of
the plan.
Mr. Ghosn concluded: “This plan will boost the growth and profitability of our member companies. We
intend to deliver on growing synergies, with three autonomous companies cooperating with the
efficiency of one. The Alliance has grown and performed with two members since 1999. With Alliance
2022, we will prove that we will grow and perform with three companies or more.”

ALLIANCE SYNERGIES:

Renault – Nissan – Mitsubishi reported a 14% increase in annualized synergies to €5.7 billion in 2017, up
from €5 billion in 2016, as members of the world’s largest automotive alliance benefited from growing
cost savings, incremental revenues and cost avoidance. Increase in the synergies reflects the economies
of scale realized by the Alliance members, which has reported a total sales of more than 10.6 million
vehicles for 2017 – thereby becoming the world’s largest automotive group in terms of sales of
passenger cars and light commercial vehicles (LCVs).

As a part of the converged Engineering function, the Alliance member companies share the R&D costs
and investments, which significantly increases their competitiveness. For instance, Nissan and Mitsubishi
Motors joined forces in 2016 to develop the next generation of Kei cars. In 2017, the Alliance Purchasing
Organization (formerly RNPO) generated significant cost reductions and avoidance through centralized
sourcing of vehicle parts, critical equipment and tooling, global contract negotiations, and common
utilities sourcing at facilities around the world.

Some of the examples of new synergy include:

• Adoption by Mitsubishi Motors of Nissan Sales Finance and Renault RCI Bank and Services capabilities;
• Critical benchmarking between Nissan and Mitsubishi Motors in the ASEAN region;
• Common shared spare parts warehouses between Renault, Nissan and Mitsubishi Motors in Europe,
Japan and Australia.

The Synergies were also realized in Manufacturing, through vehicle production on shared platforms such
as the Datsun Redi-Go and Renault Kwid, and through the cross-manufacturing activities such as Renault
Alaskan production at the Nissan plants in Cuernavaca, Mexico and Barcelona, Spain. Costs that are
associated with vehicle transportation were significantly reduced in 2017, as both Nissan and Mitsubishi
Motors have combined shipments of finished vehicles from plants in Thailand to their respective dealers
around the world.

The creation of Light Commercial Vehicles (LCV) converged business unit in 2017 has maximized the
cross-development and cross-manufacturing, delivering synergies in costs and technology in vehicles
such as the Nissan platform based one-ton pick-up truck by Renault and Daimler. This also has allowed
the extension of Alliance market coverage to 77% with a total range of 18 models across Renault, Nissan
and Mitsubishi Motors.

Future for this Alliance

The long-term outlook for the alliance, says Nobumichi Hattori, a former Nissan employee, is very
negative. Neither Jean-Dominique Senard, the chairman of Renault, nor Nissan’s chief executive Hiroto
Saikawa look able to provide the management Mr Ghosn brought to bear. “To put it extremely,” says Mr
Hattori, now at Waseda university, “it would have been better for the alliance if it had kept Ghosn —
even if that meant sacrificing ¥1bn a year in embezzlement.”

Either way the alliance has picked a dreadful moment for its existential crisis. The global auto industry is
already facing its sternest test in decades. While sales are tumbling in most large markets, carmakers are
being forced to invest in costly technologies such as electric battery power, autonomous vehicles to meet
ever-tighter emissions regulations, squeezing their already-thin margins on the vehicles.

In June, Toyota has revealed plans to throw itself into electric vehicles in alliance with Subaru and Suzuki.
Mazda is also assumed to join imminently. If that co-operation holds, which Toyota is primed to ensure, it
would already be bigger alliance than the Nissan-Renault-Mitsubishi alliance in terms of cars sold per
year globally.

While recognising these threats, both companies insisted that everything is working as it was before. At
Nissan’s annual general meeting, the carmakers were keen to show they had made peace and stood
ready to rebuild the alliance.

However, senior executives of both companies have admitted that there have been fundamental shifts in
recent months that may undermine efforts to repair relations of the alliance. Nissan’s leadership is
increasingly guided by a revitalised sense of the company’s Japanese heritage and by a belief that after
years of depending on Mr Ghosn to protect it from French dominance so far, Nissan must now seek a
more structural independence from its French partner. Renault bosses, meanwhile stick to the alliance,
blaming much of the current problems on a small number of more nationalist voices surrounding Mr
Saikawa.

The threat to the alliance has crystallised questions that have lain in the background for years about its
true financial value that they report every year. Every year they produce a “synergy” number, which
measures the direct savings and total avoided costs, and also intends to show the material benefits to
the three alliance partners. Under Carlos Ghosn that number rose every year without fail, painting a
picture of increasing success over the years. In 2017, the figure was €5.7bn.

A spokesperson for the former Nissan’s chairman described the “allegation as laughable”, adding that “
the synergy figures were all meticulously validated by financial comptrollers of each company, and were
formally presented to the relevant boards before being communicated publicly. The performance of the
alliance under his leadership speaks for itself.”
Mr Carlos Ghosn also made several major decisions whose primary purpose was a mix of political &
Cosmetics rather than the result of cold number crunching. Moving the production of the small Nissan
Micra car from India to Renault’s underperforming plant at Flins, less than an hour’s drive from Paris, was
a prime example of this. The financial decision of going to France was made up just in the view of one
person involved in the entire process. Aside from isolated exceptions, such as the joint purchasing
department, common spare and shared manufacturing platforms that saw vehicles such as the Nissan X-
Trail and Renault Koleos use the same base, beneath the surface were two companies that preferred
independence to collaboration.