Why the Alliance will last

Part 1

Earlier this week, we announced the latest initiatives to drive convergence within the Alliance.

This important step highlights how the alliance of Groupe Renault, Nissan Motor and Mitsubishi Motors works. After 19 years of existence, the Alliance tells a story of growth. It tells a story of working across cultures in a globalized world. It tells a story of innovation in an industry full of change. It tells a story of partnership in a world full of mergers. And it’s a story meant to last, which we are writing every day.

I’ll share a few principles on how we work here in a series of posts.

Strong convergence goes along with strong empowerment

The Alliance has made each of its member companies stronger and healthier while they retained and grew their own identities, brands, cultures and products.

How did we make this work?

First, we make our path by walking.

The Alliance was built step by step, converging functions over time as the maturity of our partnership allowed. Back in 1999, when the Alliance was formed between Renault and Nissan, we started with the most obvious: Purchasing. It was the basis of our cooperation as it addressed cost challenges. In 2014, we moved to converge engineering, manufacturing & supply chain and human resources/talent management.

We understand each other’s cultures, identities and territories. We know one another and have built a mutual trust. Trust is one of the major asset of the Alliance: our partnership is built on a 20-year history of common projects and win-win initiatives.

Second, we only converge what significantly boosts each company’s growth and performance.

The Alliance is about efficiency and delivery. We are more efficient because we buy together, we plan together, we build technology bricks and platforms together, we recruit talent together. Soon, we will maintain quality standards and drive aftersales together. This generates significant economies of scale, cost reductions and incremental revenues.

As we converge, we eradicate duplication across the member companies. If one company has a part or technology, the other should not duplicate the work. This will help us as we target a doubling in annual synergies to over 10 billion euros by the end of 2022.

While seeking efficiency across all member companies, the Alliance delivers. It delivers new technologies, new business opportunities, new solutions. This is particularly important as we work to shape the car of the future: connected, electric, autonomous, and shared. I’ll talk more about this in a later post.

Third, each company is responsible for its own business.

Renault, Nissan and Mitsubishi remain distinct and autonomous, with their own boards, shareholders, revenues and identities. It’s up to them to make the most of what the Alliance can bring in terms of scale, cost reduction and incremental revenues. It’s up to them to turn the benefits of the Alliance into a competitive advantage on the market and to develop their brand image, their car design and their customer relationship. Each company has its own strategy.

This diversity is a strength. It gives us the ability and the scale to compete in every segment, in every geography and at every price-point.

Working across companies also forces us to go beyond the obvious. That’s how the Alliance came about. Nissan was struggling alone. Renault was struggling alone. Mitsubishi was struggling alone. Only when we work together are we able to achieve an outcome that is more stable, more creative and more successful.

The Alliance tells a story of becoming greater than the sum of the parts. It’s how we’ve built the world’s largest automotive alliance with over 10.6 million vehicles sold in 2017, and how we’ll keep growing as our industry transforms.

In my next post, I’ll discuss how the Alliance model is particularly relevant to face disruptions and embrace new technologies.