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Renault, Nissan and Mitsubishi reboot alliance with new strategy

Jill Petzinger
Jill Petzinger, Germany Correspondent, Yahoo Finance UK
The alliance said that the new strategy could reduce development costs for new models by 40%. (Martin Bureau /AFP via Getty Images)

Carmakers Renault (RNO.PA), Nissan (NSANY), and Mitsubishi (MSBHY) presented a new strategy designed to reinvigorate their 21-year alliance at a press conference on Wednesday.

The heads of the French and Japanese automotive companies said they would deepen their production co-operation to increase cost efficiency and ensure their survival as a group.

The new strategy is based on a “leader-follower” concept, meaning one of the carmakers will lead on one type of vehicle or technology and one geographical region, which would mean less doubling up on development and production costs.

The alliance said that the new strategy could reduce development costs for new models by 40%, and potentially some factories may close as a result of more synergy across production.

“We will focus on efficiency and competitiveness, rather than volume,” said chairman of the alliance Jean-Dominique Senard at the press conference. “The new framework will allow each Alliance member to enhance its core capabilities, and benefit from the capabilities of the other firms.”

“In putting it back to the original growth strategy, how we can utilise the power of the alliance will be key to the future of Mitsubishi Motors,” said Mitsubishi CEO Osamu Masuko.

READ MORE: France earmarks €8bn stimulus package to support its car industry

The new plan to tighten cooperation builds on the closer cooperation favoured by former group boss Carlos Ghosn. Ghosn, who was arrested on fraud allegations in 2018 in Tokyo, jumped bail and fled to Lebanon at the end of 2019.

Ghosn’s acrimonious departure rocked the alliance, which was trying to rebuild when the coronavirus pandemic arrived, forcing factories all over the world to shut and causing a collapse in consumer demand.

Renault holds a 43% stake in Nissan, while Nissan has a 15% stake in the French car giant.

French president Emmanuel Macron on Tuesday announced an €8bn ($8.8bn, £7.1bn) rescue package to help the country’s struggling car industry survive the coronavirus crisis, including a state-backed loan of €5bn for Renault.