Nissan, Renault unveil steps to cut costs, revamp alliance

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TOKYO – and Japanese partners Motor and Mitsubishi Motors unveiled to standardize platforms further and push for more joint purchasing to reduce costs, which each company focusing on its strengths.

The measures will help deliver savings of as much as 40 per cent in model investments for jointly developed vehicles, the companies said in a statement on Wednesday (May 27). Nissan will focus on autonomous driving, Renault on the body of electric cars and electric powertrains while Mitsubishi Motors will work on plug-in hybrids, they said.

Renault, Nissan and Mitsubishi Motors need each other more than ever now, with the global coronavirus pandemic forcing automakers to shutter showrooms and factories. The industry is also facing a once-in-a-generation shift to electric vehicles and autonomous driving that will require significant investment in technology and filter out losers and winners. After coming under strain last year, the partnership is seeking a fresh start, backed by new measures at the companies to improve profitability.

“The new model focuses on efficiency and competitiveness, rather than on volumes,” Jean-Dominique Senard, chairman of the Alliance Operating Board and Renault, said in a news conference.

Nissan will lead efforts in China, North America and Japan, while Renault will focus on Europe, Russia, South America and North Africa. Mitsubishi Motors will continue its efforts in Southeast Asia, where it already has a strong footprint.

In designating the so-called leaders and followers for projects, the partners are tackling one of the most prickly issues they have faced during the past decades: infighting and power struggles between French and Japanese engineering teams. The goal is to have half of the car models in the alliance produced under the new operating model, they said.

COST CUTS

Renault is preparing to on Friday a cost-cutting plan worth 2 billion euros (S$3.1 billion) over three years that is expected to include site closures in France and staff reductions.

Renault has been caught in a political whirlwind this week due to union opposition to shutting factories and talks with the government, its most powerful shareholder, on a 5 billion-euro state-backed loan.

Renault is considering shutting an engine and transmission factory in Choisy-le-Roi, France, and is mulling the future of four other production sites, Franck Daout, spokesman for the CFDT union, said by phone Tuesday following meetings with Renault chairman Jean-Dominique Senard and Finance Minister Bruno Le Maire. These include Flins, iron foundry Fonderie de Bretagne, a factory in Dieppe and its Maubeuge site.

Le Maire on Tuesday said Flins shouldn’t be closed and any plans for Maubeuge need to be closely examined, while acknowledging the company’s manufacturing capacity is twice production levels.

NISSAN MID-TERM PLAN

Nissan is due to announce its own restructuring plan on Thursday that will costs by 300 billion yen (S$3.96 billion) and phase out the Datsun brand, a person with knowledge of the matter has said.

Nissan has been in turmoil since the November 2018 arrest of former chairman Carlos Ghosn, with an aging car lineup and management paralysis denting its outlook. The automaker warned last month it expects to post a loss for the latest fiscal year through March. The company also plans to shut down one production line in addition to the recently closed operation in Indonesia and reach the reduced spending target this year by cutting marketing, research and other costs, the person said.

Although Nissan is forecasting a 12 per cent decline in sales to 10.2 trillion yen for the just-ended fiscal year, the new mid-term plan calls for a return to revenue of 11.5 trillion yen within three years, with fixed costs kept at reduced levels, the person said.

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