In his latest LinkedIn Influencer post, Renault-Nissan Alliance CEO Carlos Ghosn offers his view on the recent Mitsubishi Motors partnership.
The alliance strategy that saved Nissan from bankruptcy nearly two decades ago is inspiring the revival of Mitsubishi Motors.
In 1999, Nissan partnered with Renault to create the Renault-Nissan Alliance. By joining forces, Nissan achieved a historic turnaround. Over the subsequent 17 years, both companies have grown stronger together.
As Mitsubishi Motors faced the repercussions of misreporting fuel-economy figures earlier this year, Nissan had a clear choice: Sever ties with its longtime partner, or choose to support its revival. We chose the latter, for three primary reasons:
It was a strategic opportunity: With Mitsubishi Motors, annual sales of the Renault-Nissan Alliance will reach 10 million units by the end of this fiscal year, putting the Alliance in the ranks of the top three global automotive groups. That gives us the economies of scale to compete with our largest competitors and maintain a significant advantage over the smaller ones.
Mitsubishi’s strengths complement Nissan’s: We will focus on realizing synergies through joint purchasing, deeper localization, joint plant utilization, common vehicle platforms, technology-sharing and an expansion of our combined presence in both mature and emerging markets. And those synergies – which we define as actions that reduce costs and investments, avoid costs and investments, or increase revenue – are significant.
We believe in the strength of partnership: We also believe in the power of second chances. When Nissan was struggling 17 years ago, Renault offered a hand up. We know what it’s like to face a crisis and emerge stronger. But unlike Nissan in 1999, Mitsubishi Motors has a healthy balance sheet; what’s missing is its customers’ trust. By addressing the root causes of the crisis and re-earning its customers’ trust, Mitsubishi Motors can be sustainably successful.
It will need to be done by Mitsubishi Motors itself – there is nothing Nissan or any outside entity can do to change the mindset or culture of another company. But Nissan can and will provide its skills and share its experiences from its own transformation.
Nissan and Renault will benefit as well from this new partnership, starting immediately with savings from joint purchasing. Other examples will include the ability to leverage Mitsubishi’s know-how in Japan’s popular kei car segment, to adopt Mitsubishi’s systems for plug-in hybrid electric vehicles, to capitalize on its strength in pickup trucks, and to build on its successful operations in Southeast Asia.
We believe the synergies will return 10 percent of Nissan’s investment in 2017 already and more than 20 percent the year after. As our partnership grows in the years to come, we will identify additional synergies at the regional level, as well as explore specific benefits for Renault and our other partners.
Of course, the success of any alliance is never guaranteed. Others have tried and failed. But the Renault-Nissan Alliance has 17 years of experience that we can apply to this next challenge in our unique and successful story of global, cross-cultural cooperation.
In the process, we expect to utilize our new scale and leverage Mitsubishi Motors’ assets to deliver new technologies and better vehicles to our customers around the world.
This is a time of change and unpredictability in the auto industry, as new technologies and new players promise to disrupt the status quo. One thing we know from experience is that we can do far more with the right partner than we can achieve alone.