German auto major Daimler and Franco-Japanese alliance Renault-Nissan on Wednesday announced a three-way tie-up, including equity swaps, for co-operation in development of small cars and light commercial vehicles.
Under the new deal, Renault and Nissan will each take a 1.55 per cent stake in Daimler, which in turn will take 3.1 per cent of new Renault shares, and 3.1 per cent of existing Nissan shares. Renault-Nissan and Daimler estimate they will gain €2 billion each in the next five years in cost savings and additional sales.
This deal between Daimler and the Renault-Nissan heralds a new kind of partnership among automakers seeking to survive Europe's challenging car market.
At the crux of the deal is an agreement on sharing components: Renault-Nissan will provide powertrains for Daimler's smart brand of micro cars, Renault's Twingo (and their electric versions), and the Mercedes-Benz range of premium compact cars. Daimler will also provide petrol and diesel engines for the Infiniti, the luxury division of Nissan, while collaboration will also take place in the area of light commercial vehicles.
The strategy of one automaker acting as a supplier for another is not new — Peugeot Citroen has been acting as an engine supplier to BMW, but the extent of cooperation seen in this latest deal is unprecedented. “This is a very project-orientated, very restricted type of cooperation, where one acts as a supplier to another,” said Mr Christoph Stuermer, a Director of the automotive group at IHS Global Insight.
Daimler has struggled with previous attempts at alliances: The company was forced to abandon its control of Mitsubishi back in 2005, while its tie-up with Chrysler proved equally disastrous. Will the new alliance prove successful? The highly-specific nature may increase chances of success. “It is an attempt to avoid the difficulties of a full inter-cultural merger and restricts the cooperation to the traditional mould of supplier-buyer relations,” said Mr Stuermer.
Under the new deal, Renault and Nissan will each take a 1.55 per cent stake in Daimler, which in turn will take 3.1 per cent of new Renault shares, and 3.1 per cent of existing Nissan shares. Renault-Nissan and Daimler estimate they will gain €2 billion each in the next five years in cost savings and additional sales.
This deal between Daimler and the Renault-Nissan heralds a new kind of partnership among automakers seeking to survive Europe's challenging car market.
At the crux of the deal is an agreement on sharing components: Renault-Nissan will provide powertrains for Daimler's smart brand of micro cars, Renault's Twingo (and their electric versions), and the Mercedes-Benz range of premium compact cars. Daimler will also provide petrol and diesel engines for the Infiniti, the luxury division of Nissan, while collaboration will also take place in the area of light commercial vehicles.
The strategy of one automaker acting as a supplier for another is not new — Peugeot Citroen has been acting as an engine supplier to BMW, but the extent of cooperation seen in this latest deal is unprecedented. “This is a very project-orientated, very restricted type of cooperation, where one acts as a supplier to another,” said Mr Christoph Stuermer, a Director of the automotive group at IHS Global Insight.
Daimler has struggled with previous attempts at alliances: The company was forced to abandon its control of Mitsubishi back in 2005, while its tie-up with Chrysler proved equally disastrous. Will the new alliance prove successful? The highly-specific nature may increase chances of success. “It is an attempt to avoid the difficulties of a full inter-cultural merger and restricts the cooperation to the traditional mould of supplier-buyer relations,” said Mr Stuermer.
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