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Renault-Nissan in 2011 sold over 600,000 AvtoVAZ cars

January 11, 2012, 7:56 UTC+3

Renault in the near future will launch production in China

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NEW YORK, January 11 (Itar-Tass) — The Renault-Nissan alliance, created in 1999 as a partnership of the French automotive group Renault and Japan’s Nissan, last year sold 8.03 million vehicles, Renault-Nissan CEO Carlos Ghosn announced on Tuesday at the North American International Auto Show underway in Detroit.

According to him, this figure includes 2.72 million sold Renault vehicles, a record 4.67 million sold Nissan vehicles, as well as 638 thousand cars sold by the Russian partner of the alliance - AvtoVAZ. For comparison, in 2010, the alliance’s companies supplied a total of 7.28 million vehicles to their customers. The sales growth of Renault and Nissan in 2011 was 4.6 percent and 14.4 percent, respectively.

“Despite a very challenging year for the automotive industry, marked by the earthquake and tsunami on March 11 (in Japan), the October floods in Thailand, an unexpected rise in the yen and the problems in the euro zone, the alliance has achieved a 10.3 percent sales growth,” Ghosn said.

This year, the Renault-Nissan head forecasts global growth in demand for cars, except for the European market, where a 3-percent decline is expected.

Ghosn also said that Renault in the near future will launch production in China – “the world’s largest automotive market.” According to the alliance director, in this the French company will rely on Nissan’s experience.

Renault-Nissan Alliance is a strategic partnership between Paris-based Renault and Yokohama, Japan-based Nissan, which together sell one in 10 cars worldwide. The companies, which have been strategic partners since 1999, have 350,000 employees and five major brands: Renault, Nissan, Renault Samsung Motors, Dacia and Infiniti. They sold 7.28 million cars in 190 countries in 2010, behind Toyota and General Motors for total volume.

The strategic partnership between Renault and Nissan is not a merger or an acquisition. The two companies are joined together through a cross-shareholding agreement. The structure was unique in the auto industry during the 1990s consolidation trend and later served as a model for PSA Peugeot Citro·n and Mitsubishi, and Volkswagen and Suzuki, though the later combination failed. The Alliance itself has broadened its scope substantially, forming additional partnerships with automakers including Germany’s Daimler, China’s Dongfeng Motor, and Russia’s AvtoVAZ.

The Alliance is a strategic partnership based on the rationale that, due to substantial cross-shareholding investments, each company acts in the financial interest of the other—while maintaining individual brand identities and independent corporate cultures. Renault currently has a 44.3 percent stake in Nissan, and Nissan holds a 15 percent stake in Renault. Although more companies have adopted such an arrangement, it remains controversial. Some business journalists have speculated that the companies should be joined in a conventional merger in order to make a “bold” move, while other interested parties have said that the companies should separate.

Carlos Ghosn is the Chairman and CEO of the Alliance. Ghosn is a Brazilian-Lebanese-French businessman who is also Chairman and CEO of Nissan Motors and holds the same positions at Renault. Ghosn has compared the Renault-Nissan partnership to a marriage: “A couple does not assume a converged, single identity when they get married. Instead, they retain their own individuality and join to build a life together, united by shared interests and goals, each bringing something different to the union. In business, regardless of the industry, the most successful and enduring partnerships are those created with a respect for identity as the constant guiding principle.”

Ghosn has refuted calls for a conventional merger or separation, advocating an evolutionary approach that results in more and more joint development between the two companies. “You have to be careful that at the end of the day, by trying to do more in the short-term you don't end up destroying what had been delivering so much result on the mid-term and long-term,” Ghosn was quoted as saying in March 2011 Reuters Special Report, in which he said conventional acquisitions in the auto industry in the past decade have failed. “It is not validated by any example in the car industry that this works. Not one example. And saying something different is just rubbish.”

The goal of the Alliance is to increase economies of scale for both Renault and Nissan without forcing one company's identity to be consumed by the other's. The Alliance achieves scale and speeds time to market by jointly developing engines, batteries and other key components. For instance, Renault builds nearly all of the diesel engines in Nissan cars sold in Europe. Nissan’s market share increases in Europe have been a result of badging various Renault van models such as the Renault Kangoo/Nissan Kubistar, Renault Master/Nissan Interstar, Renault Trafic/Nissan Primastar.

Collaboration between Renault and Nissan focuses on capital-intensive research projects such as sustainable, zero-emission transportation and development of automobile manufacturing in emerging markets such as Russia and India. The Alliance also oversees purchasing for both companies, ensuring larger volume and thus better pricing with suppliers.

The Alliance develops “best practices,” borrowing systems and controls from one company to strengthen the other company where appropriate. The “Nissan Production Way” became the cornerstone of the “Syst·me de Production Renault” standard used by all Renault factories. Renault reported productivity increasing by 15 percent due to the new system.

In February 2008 Renault acquired a 25 percent stake in AvtoVAZ, known for its Lada range of vehicles. Through the Alliance, Renault and Nissan intend to increase ownership in AvtoVAZ to 50 percent. The Alliance’s market share objective in Russia is to expand from 33 percent to 40 percent by 2015 with AvtoVAZ. With Renault’s 25 percent shareholding in AvtoVAZ, the Alliance has three plants in Russia at Togliatti, Moscow and St. Petersburg and total production capacity will be 1.3 million units by 2012.


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