The fact that Renault and Nissan are negotiating a merger and the creation of a new company, according to Bloomberg, citing its own sources. To date, automakers are partners in a strategic alliance, which relatively recently included Mitsubishi.
Renault now owns 43% of Nissan; the Japanese company, in turn, has a 15% stake in the French automaker. Now their leaders have decided to consider the possibility of creating a new single company with common shares, that is, we are talking about the receipt of securities in the new company by the shareholders of Renault and Nissan in exchange for their shares in automakers.
The new company is supposed to retain both its headquarters in Japan and France. Alliance Chairman Carlos Ghosn is leading the negotiations. According to sources, it is he who will subsequently lead the new merged company.
Business messages about a possible merger were taken with a bang: shares of Renault and Nissan rose (by 8.3% and 3.6% respectively) after the appearance of relevant reports of negotiations.
Note that the decision of the management of the companies themselves to merge into one company will not be enough. To conclude the deal, the parties will need to obtain the approval of the Japanese government, as well as the government of France, which owns a 15% stake in automaker Renault. It is assumed that the authorities of the countries will perceive the proposal without enthusiasm.
According to sources, representatives of Renault and Nissan have been negotiating over the past few months, but they have not yet reached a final agreement. A spokesperson for the alliance said the group would not comment on the rumors.
It is reported that the combined structure of Renault and Nissan will become a serious competitor for the Volkswagen concern and Toyota Motor Corporation. As an industry expert noted, “Size matters in the automotive industry.”
According to the plans of the alliance, by 2022, the total sales of cars in the world should reach 14 million copies. Recall that in 2017 they sold a total of 10.6 million cars. The volume of sales of the global market leader - the Volkswagen concern - amounted to 10.7 million units, Toyota Motor - 10.4 million units.
Recall that, based on the results of sales of new cars on the world market in 2017, it was compiled. It included: China, USA, Germany, India, Japan, Great Britain, Brazil, France, Canada and Italy. Russia took 12th place with a score of almost 1,600,000 copies.
With the acquisition of AvtoVAZ and its Lada brand, Renault-Nissan hoped to capitalize on the vast Russian market. But the crisis and local mores made the task more difficult.
When Nicolas Maure arrived in Tolyatti last February, he not only had to learn Russian, meet with local authorities and immerse himself in a pile of industrial papers ... To his great surprise, the new French head of AvtoVAZ was offered to go through a training program along with his bodyguards. In the Volga forests he was taught to handle a machine gun. “I fired 500 rounds at the silhouettes of terrorists, I had a bruise all over my shoulder,” he says. “In Russia, everything is somehow masculine.”
So the former president of the Romanian Dacia discovered the charm of Tolyatti, a city reminiscent of Soviet times with a population of 700,000 people, streets as wide as runways and rows of houses gray as prisons. This is not to mention the temperature, which drops to -25°C. Invigorating! Business in Russia is a struggle. Especially when it comes to putting such a national giant as AvtoVAZ, a manufacturer of cars of the popular Lada brand, on its feet.
Since Renault-Nissan joined the board of directors in 2008, the alliance has invested more than a billion euros in the company. In just eight years, its sales fell from 640,000 to 269,000. In 2015, losses exceeded 900 million euros, and in the first nine months of 2016 they amounted to 498 million. However, giving up is out of the question. Under mild pressure from Moscow, Renault (already without Nissan) even began the process of recapitalizing AvtoVAZ, as a result of which the company will have 70% of the company's capital. And it will turn into a real "daughter". “Renault is going to consolidate unprofitable production, which will affect operating profit,” warns London-based Jefferies analyst Philippe Houchois.
How could the strategist Carlos Ghosn miss the mark? In his defense, it is worth saying that in the era of association with AvtoVAZ, the prospects were simply brilliant. “Russia was becoming the largest car market in Europe, surpassing even Germany,” says Emmanuel Quidet of Ernst & Young.
In Russia, the number of cars is 350 per thousand inhabitants compared to 650 in Western Europe. More than 50% of the total fleet of machines (40 million) is more than ten years old. The ancient Zhiguli, that is, the first Ladas, which were produced from the 1970s to the end of the 1980s on the basis of the Fiat 124, are still driving along snow-covered roads ...
Alas, the conquest of the market did not go as planned. First of all, the shock wave of the mortgage crisis did not spare the Russian economy. The collapse in oil prices, the devaluation of the ruble and Western sanctions after the annexation of Crimea have further exacerbated the situation. The automotive industry has been one of the main victims, with an almost 45% decline in sales since 2012 (from 2.7 million to 1.5 million). Foreign manufacturers that have expanded production in the country have had to deal with the consequences. So, Opel decided to pack their bags.
Ford, Toyota and PSA have set sail hard in anticipation of better times. Renault-Nissan has effectively become the market leader with AvtoVAZ, whose giant plant in Tolyatti makes Renault (renamed Dacia), Nissan and Datsun. Therefore, it is already very difficult to reverse here.
Be that as it may, the failures of the alliance were explained not only by the crisis. The local business culture also played a role. Take, for example, business management. “AvtoVAZ has a strange system of co-chairmanship. You constantly wonder how much Renault-Nissan actually owns, since the company's hands are so tied, ”says consultant Eric Faron, who understands the Russian market.
Context
Renault: restore order in Russia
The Wall Street Journal 04/13/2016Renault-Nissan is dragged into AvtoVAZ by force
Liberation 03.11.2010Lada wants to produce beautiful cars
Die Welt 07.09.2016Alliance will increase its share in the Russian market
Toyo Keizai 24.12.2014 So who really makes the decisions? In April last year, as a result of a strange reshuffle, Carlos Ghosn ceded the chair of the chairman of the board of directors to Sergei Skvortsov, general director of the Rostec state corporation (AvtoVAZ shareholder). Other figures close to power also sit on the council, such as Eduard Vaino, who is responsible for relations with the government. His son Anton Vaino was recently appointed head of President Vladimir Putin's administration. That is, Moscow is closely following the course of the meetings.In such circumstances, solving serious problems is not at all easy. Nicolas Maur's predecessor, Swede Bo Andersson, the first foreigner to head AvtoVAZ, was convinced of this from his own experience. From 2013 to 2016, he halved his bloated staff and got it into his head to renegotiate sometimes suspicious contracts with a number of local manufacturers. As a result, everyone, from the chairman of the factory trade union (38 thousand members!) Sergey Zaitsev, to the head of Rostec Sergey Chemezov and the mayor of Togliatti Sergey Andreev, began to demand his head. And last year she flew. Apparently, the alliance was presented with a fait accompli.
Thus, Nicolas Maure faces a difficult task. To be convinced of this, it is enough to enter the territory of the plant (600 hectares), over which hangs a blue administrative building. At the checkpoint, guards closely monitor those who come and go. People in blue jackets with impassive faces walk around the cars, check the documents of passengers, look under the seats, look into the trunk and almost under the hood. “They need to make sure that no one takes out the parts,” a factory representative explains apologetically…
Is theft a common problem here? In any case, the scale is impressive. The smelter, the foundry, the production of engines and transmissions ... With the exception of tires, almost everything is produced on site. An absurdity in the current era of the strongest specialization. And it is hardly necessary to explain that today the mechanism works at a slow pace. The capacity of the plant capable of producing a million cars is 45%. In the current circumstances, the assembly lines, at the discretion of the management, are running only four days out of five. The only exception was the most modern B0, which the alliance installed in 2012 for 400 million euros.
Only now, already low salaries (430 euros on average, 290 euros for workers - the main factor of competitiveness) have decreased by 20%. AvtoVAZ invites employees to participate in public works paid by the government. “Recently, we have repainted the city's churches,” says Nicolas Maure.
To support the plant, he also transferred the production of Dacia bodies to Togliatti for assembly at the plant in Oran, Algeria, which until recently were produced in Romania. Another important task is to comply with Western manufacturing standards. Although this will not be achieved quickly. In terms of productivity, the plant in Togliatti is 25% behind the production of Dacia in Pitesti, Romania.
Not the best indicators are demonstrated even by modernized workshops. The Sandero, Logan and Nissan Almera engine plant, which also assembles gearboxes, uses the Japanese "kaizen" (continuous improvement method). At the entrance, Alexander Egorov shows a table with graphs and charts: comparative indicators of a dozen factories from around the world in terms of such parameters as productivity, quality, production time, etc. All this, of course, is interesting, but the local enterprise is lagging behind in almost all criteria ...
It is worth saying that AvtoVAZ has come a long way. There was a time when a Lada buyer could lift the hood and find that a couple of parts were missing. With the advent of Renault, the quality has improved, although it is still not worth losing vigilance. On the walls of the B0 assembly line, where Ladas, Dacias and Nissans are built, there are pictures showing what to avoid. In one photo, employees are working with rings on their hands, thereby risking scratching the coating. On another, the belt buckle becomes a source of threat. “At every crew change, we set aside five minutes to review instructions,” explains the foreman.
It remains only to restore the brand image. Buyers often prefer foreign cars (especially Korean ones) Ladam, despite their low price (from 5,500 to 12,000 euros). “We are going to raise the status of the product somewhat, while maintaining affordability, durability and ease of repair,” says Nicolas Maure. His dreams go as far as resuming exports. Not only to the former fraternal countries, but also to Africa, the Middle East and even Western Europe. “We are thinking about a successor to the LADA 4x4, which would have better cross-country ability and competitiveness in terms of safety and environmental friendliness,” he says. It won't be easy to get everything...
The materials of InoSMI contain only assessments of foreign media and do not reflect the position of the editors of InoSMI.
The Renault-Nissan Alliance is now called Renault-Nissan-Mitsubishi. Carlos Ghosn announced this today at the presentation of a new strategy for six years - until 2022. The name of Mitsubishi Motors (MMC), 34% of which is the alliance, is included in the official name, and the logo with two yellow-red lines is transformed into a kind of geometric figure with three vertices.
Alliance old logo
However, this is more of an advance. The official organizational structure on the website of the alliance has not changed: Mitsubishi is subordinate to Nissan, which organizes the group on an equal footing with Renault (50/50%). Moreover, the company responsible for the operation of the alliance and registered in Amsterdam is still legally called Renault-Nissan B.V.
Structure of the Renault-Nissan-Mitsubishi Alliance
As for the keynote speech itself, Carlos Ghosn first of all recalled that in the first half of 2017, the alliance came out on top in the world in car sales: 5 million 270 thousand cars and light commercial vehicles. The plan is to increase annual sales to 14 million vehicles by 2022, revenue to $240 billion compared to last year's $180 billion.
Carlos Ghosn
To this end, the alliance companies will release 40 new models, of which 12 will be purely electric, and one will be completely autonomous. With the introduction of a common electric bogie and platform for mid-size vehicles, the number of cars built on joint modular platforms will grow from two million to nine million a year. By 2020, Mitsubishi will also have access to common modular platforms: the total cost savings for the alliance should be $11.9 billion.
These are the goals in the first approximation. More detailed and specific plans will be announced at the conferences of each member of the alliance. By right of precedence, the first such meeting on October 6 will be held by Renault.
MOSCOW, December 12, 2012 Renault-Nissan Alliance and Russian Technologies State Corporation have created a joint venture that will own all their shares in the authorized capital of JSC AVTOVAZ and become a stable, long-term controlling shareholder for the largest automotive company in Russia and the owner of the LADA brand.
President of the Renault-Nissan Alliance Carlos Ghosn today announced the creation of the Alliance Rostec Auto BV JV at a ceremony in Moscow, together with Sergey Chemezov, General Director of Russian Technologies State Corporation, Chairman of the Board of Directors of AVTOVAZ, and Igor Komarov, President of AVTOVAZ OJSC.
""Today's historic agreement is a unique deal that benefits all three brands, Renault, Nissan and LADA, and will mark a new milestone in successful cooperation," said Mr. Ghosn. - ""Joint venture will accelerate our development in Russia and will contribute to the competitiveness of AVTOVAZ, the leader of the Russian automotive industry"".
Under the terms of the deal, the Renault-Nissan alliance will invest 23 billion rubles (equivalent to $742 million). As a result of these investments, Renault-Nissan will receive 67.13% of the joint venture's capital by mid-2014. After that, the joint venture will own 74.5% of AVTOVAZ.
Renault will invest about 11.3 billion rubles ($366 million) in the JV. Renault plans to acquire a 50.1% stake in the joint venture by June 2014. Nissan will invest 11.7 billion rubles ($376 million). Nissan plans to acquire 17.03% of the joint venture by the same period.
In the same period, Russian Technologies State Corporation will receive 32.87% of the joint venture.
At the time of completion of the transaction in 2014, the joint venture being created will buy out all the shares of AVTOVAZ, which are now owned by Troika Dialog Investments Limited. The deal is subject to relevant preconditions, which must be strictly adhered to.
Together for the economic growth of Europe
The Board of Directors of Alliance Rostec Auto BV will resolve strategic issues and tasks and will become a platform for discussion for the Renault-Nissan Alliance and Russian Technologies State Corporation.
As part of the deal, Renault-Nissan President Carlos Ghosn will become Chairman of the Board of Directors of the JV Alliance Rostec Auto. The Board of Directors will include:
Three representatives from the Renault-Nissan Alliance: Dominique Thormann, Renault CFO; Joseph Peter, Nissan CFO; Bruno Anselin, Renault Senior Vice President and Eurasia Region COO;
Two representatives from the Russian Technologies State Corporation: Sergey Chemezov, General Director of the Russian Technologies State Corporation and Igor Zavyalov, Deputy General Director of the Russian Technologies State Corporation.
The Board of Directors of AVTOVAZ will be expanded from 12 to 15 members. From the side of the Renault-Nissan alliance, it will include 8 representatives, whose candidatures must be approved by the Extraordinary Meeting of AVTOVAZ shareholders. It will take place on February 12, 2013. Sergey Chemezov will remain Chairman of the Board of Directors of AVTOVAZ, alternating in this position with Carlos Ghosn as Deputy Chairman of the Board of Directors from June 2013.
""The Russian automotive market is becoming the leader in Europe in terms of car sales," said Sergey Chemezov, CEO of the corporation. - By 2020, AVTOVAZ, together with partners, plans to reach the annual production level of more than 1 million vehicles, the quality of which will meet the highest international standards. Thanks to the partnership with the Renault-Nissan alliance, new modern and well-paid jobs will be created for residents of the city of Togliatti and the Samara region.
The deal is concluded eight months after the inauguration of a new production line at AVTOVAZ in Togliatti by Russian President Vladimir Putin, with a production capacity of up to 350,000 vehicles per year. This line will become a platform for the joint use of car platforms. In the spring of 2012, production of LADA Largus was already launched at the production complex, and yesterday the production of the new Nissan Almera began, which will reach full capacity in the spring of 2013. In 2013, the plant will produce five models of three brands - LADA, Renault and Nissan on this line. Investments in this project will amount to about 400 million euros.
""Strengthening our partnership is a logical step in our common work," said Igor Komarov, President of AVTOVAZ. - AvtoVAZ has already become multi-brand yesterday - we started producing a car for Nissan in Togliatti. Accelerated integration will increase the effectiveness of the overall effort and increase market share.
Additional Information:
AVTOVAZ Group is a member of the Renault-Nissan-Mitsubishi Alliance and produces full-cycle vehicles and auto components for 4 brands: LADA, Renault, Nissan, Datsun. The production facilities of the Group are located in Tolyatti - JSC AVTOVAZ and in Izhevsk - OOO LADA Izhevsk.
The LADA brand is represented in the B, B+, SUV and LCV segments, which make up 5 model families: Vesta, XRAY, Largus, Granta and 4x4. The brand occupies 20% of the Russian car market. The official dealer network of the Brand is the largest in Russia - about 300 dealer centers.
