The Renault-Nissan Alliance has announced that it has formed a new business unit that is intended to formalise the pair's strategy in the light commercial vehicle (LCV) space.
IHS Markit Perspective:
- Significance: The Renault-Nissan Alliance has announced that it has formed a new business unit focusing on LCVs.
- Implications: The move will formalise the two automakers strategy in this category where they have already been sharing technology for many years.
- Outlook: It remains to be seen what regions the new unit will look to for further growth, although it could be a long time to create synergies in one particular area – one-tonne pick-ups – due to the long lifecycle these vehicles have.
The Renault-Nissan Alliance has announced that it has formed a new business unit focusing on light commercial vehicles (LCVs). According to a statement, the new Renault-Nissan LCV Business Unit will be led by Ashwani Gupta – who has been appointed a senior vice-president of the Alliance – from 1 April, and who will report directly to Carlos Ghosn, chairman and chief executive officer (CEO) of the Renault-Nissan Alliance.
The move will is intended to formalise the two automakers strategy in this category. The company said that through "unleashing the full potential of Renault's van expertise and Nissan's truck know-how in key markets, the Alliance intends to grow its light commercial vehicle sales worldwide." As well as continuing to maximise "cross-development and cross-manufacturing" there is the expectation that further synergies in costs and technology will be delivered. It added that the partners will also "leverage complementary markets and products while maintaining their own brand identity, sales and revenue."
On the announcement, Ghosn was quoted as saying, "The combination of Renault, Nissan and the early collaboration with Mitsubishi Motors in a single Alliance LCV Business Unit will boost sales and deliver greater synergies... With this move, we plan to expand our market leadership by accelerating our performance in current and new, high-growth markets, based on each company's core products and market knowledge, and driven by customer needs."
Outlook and implications
LCVs are a large and important part of the Alliance business, particularly in the wake of the bringing on board of Mitsubishi Motors last year. According to IHS Markit forecasts, total volumes of such vehicles built by the automaker (including Mitsubishi) stood at 1.39 million units, around 13.9% of the total number of light vehicles built (excluding those for partners). While its brands have product line-ups which take in the majority of areas in the LCV space, it is very clear that brands that make up the Renault Group have a significant expertise in vans and Nissan (and now Mitsubishi) offer a greater benefit in the area of pick-up trucks. Renault and Nissan have already taken advantage of each other's prowess in these areas for a number of years. Nissan in Europe for example has used vehicles built off the Renault Master (NV400) and Renault Trafic (NV300; see France: 17 February 2016: Renault to produce new Nissan NV300 LCV), alongside its self-developed NV200, as well as others previously. Renault on the other hand is starting to bring to market its Alaskan pick-up which is derived from the latest generation Nissan Navara.
Gupta will now be tasked with ratcheting up the benefits of the relationship in this area so it can yield even greater synergies. His career so far at Renault, Nissan and Renault-Nissan, working in a number of departments including purchasing and as global programme director for Datsun, should give him a strong grounding in this area. However, his most recent post as vice-president of Renault's Light Commercial Vehicle Division – which he has held since 2014, and where he has been overseeing the growth of the Renault Group's worldwide LCV business – is likely to be the most important.
With Renault and Nissan already well catered for in Europe, he is likely to look to expand the opportunities for the Renault-Nissan Alliance in other markets around the world. One area could be parts of South East Asia. Although, Nissan and Mitsubishi have exposure to Association of Southeast Asian Nations (ASEAN) markets with their pick-ups, there may be opportunities to speed up growing its LCV sales in India, where Nissan has pulled back from a joint venture (JV) with Ashok Leyland. Another area where there could be opportunities is Iran, where the opening up of the market has already boosted the market for Renault. Furthermore, an ideal area of synergies could be in the area of pick-up trucks between Nissan and Mitsubishi given that they compete in the same one-tonne space. However, the opportunities for closer ties in this area is likely to be hampered by the long lifecycle of these vehicles, and IHS Markit does not expect that consolidation in this area will be achieved until 2023 at the earliest.
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The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.