March 2009

The Renault-Nissan Alliance

Ten years of a successful cooperation

THE STORY OF THE ALLIANCE

THE KEY IS LEARNING FROM EACH OTHER

HOW THE ALLIANCE WORKS

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THE ALLIANCE: A WORLD LEADER IN ZERO EMISSIONS

P 14

CONTACTS

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THE STORY OF THE ALLIANCE

Renault; How a failed merger inspired a successful Alliance
According to Carlos Ghosn, CEO of Nissan and Renault, the Alliance is the child of the failed
Renault-Volvo merger of 1993. At the last moment, Volvo - which was to own a minority (49
percent) of the merged company - walked away from the deal, fearful for its loss of
independence.
'Renault learnt a great deal from that failure,' says Ghosn, who was to join Renault (from
tyre maker Michelin) three years later. 'It learnt that mergers and acquisitions were perhaps
not good business models. No company likes to lose its identity, its soul.'
Says Bernard Rey, senior vice-president for CEO office for Renault who held a similar position
at Nissan until March 2007: 'The intended Volvo merger was a disaster for us at the time. Top
Volvo management were not supportive. They thought Renault was going to take control. In a
way, it was probably a blessing. It prefaced many subsequent mergers and acquisitions and
few, if any, have been successful.'
The DaimlerChrysler merger of 1998, initially hailed as a success as it created the world's
third largest automotive group, gave Renault further cause for concern. Renault was a
motoring minnow, tiny alongside the big players. It was desperately seeking a partner to
explore synergies and boost economies of scale.
'We had long wanted a relationship with a Japanese company,' says Patrick Plata, now
chief operating officer for Renault but executive vice-president for product, strategic planning
and programs for Renault from 2005 to 2008, who held a similar position at Nissan between
1999 and 2005. 'We imagined it might be with a smaller company like Subaru. We couldn't
imagine any big Japanese company would cooperate. My generation, who first went to
Japan in the '80s, discovered a huge gap in manufacturing capability. We were desperate
to learn. But not surprisingly, the Japanese companies weren't telling us much.'
Struggling Nissan seeks a partner
Nissan, Japan's second largest car maker meanwhile was in trouble. The worst automotive
victim of Japan's 'lost decade' of the '90s, Nissan had been unprofitable every year since
1992 (except for 1996), and had racked up over $20 billion in debt. It had exhausted its
resources to keep up with market leader Toyota. Its share of the global automotive market
had fallen from 6.6 percent in 1991, to 4.9 percent in 1998. Its domestic market share had been
in decline for 27 years in a row. It needed money, fast. At the time Nissan president Yoshikazu
Hanawa was looking for an automotive partner prepared to give substantial cash injection.
Two companies emerged as contenders: DaimlerChrysler, buoyed by initial positive
feedback to its recent merger and keen for further expansion, and Renault, looking for
an alliance with another car maker to give it greater economy of scale. DaimlerChrysler
was a clear favourite.
'DaimlerChrysler was a much better known company in Japan and regarded as a more
successful business, with more prestige,' says Toshiyuki Shiga, chief operating officer
for Nissan. 'Renault was much smaller, and much less international - no presence in
Japan or America, for instance, which was the markets Nissan knew best.'
In March, 1999, however, DaimlerChrysler announced its withdrawal, deterred by Nissan's high
level of debt. The way was left open for Renault, the sole suitor. Renault CEO of the time,
Louis Schweitzer, wishing to increase Renault's small footprint in the world automotive
industry, was determined to push ahead. He offered to purchase 36.8 percent of Nissan's
capital for $5 billion. The two companies would form an alliance. Uniquely, each partner
would retain its identity and its independence.
'I was fully involved in negotiations,' says Shiga. 'Nissan management had a preference for
Renault over DaimlerChrysler because Renault expressed clearly that they would treat Nissan

as a partner. They spoke about an Alliance, to the benefit of both companies. They spoke
about preserving corporate identities, brands, and separate managements. We liked what we
heard.
'In September 1998, I visited Renault with Mr. Hanawa, our president. We saw Mr. Schweitzer.
He asked us what Nissans biggest weakness was. Hanawa-san told Schweitzer-san that a
great weakness was our inability to implement cost reduction. Schweitzer-san mentioned
that Ghosn-san was an expert at cost reduction
'November that year was the first time I met Ghosn-san. He came to Nissan in Tokyo. Five
Nissan directors attended the meeting, including myself and Hanawa-san. The potential
deal was still secret, so not too many people were involved. Ghosn-san made a presentation
on cost reduction. I was extremely impressed. He showed how he greatly reduced Renault's
costs in Europe. The presentation was excellent - full of passion - and I thought wow, what a
strong leader.'
Louis Schweitzer did indeed ask Carlos Ghosn to go to Japan. If Ghosn refused, said Mr.
Schweitzer, the deal was off. Carlos Ghosn accepted. The Alliance was underway.
On March 27, 1999, the agreement on the Alliance was signed by Louis Schweitzer and
Yoshikazu Hanawa.
About thirty Renault executives were sent to Japan, to take up senior or influential positions in
Nissan.
When the Alliance started, Renault bought a share of Nissan because we needed the
cash. That was our priority: cash. As it was a true Alliance, the intention was for Nissan
to reciprocate and buy a stake in Renault, though this was not possible for a number of years.
We simply did not have the funds.' says Shiga. Later, Nissan bought a 15 percent stake in
Renault and Renault increased its stake in Nissan to 44.3 percent.
Renault managers, under Carlos Ghosn, attempt to understand Nissan problems
Key Renault executives, hand picked by Carlos Ghosn, arrived in Tokyo to supplement
Nissan's management from April to July of 1999.
'Mr. Schweitzer, as much as possible, asked me to send our best people to work for Nissan,'
says Bernard Long, vice-president for senior executive staff management for Renault, who
went to Japan in 1999 to help run Nissan's HR department. 'We needed people with good
listening skills, great talent for empathy with other people, open minded, straight, great level of
integrity, who must speak English and preferably already had overseas experience. They
had to have a clear ability to add value professionally. Some fields were priorities corporate planning, product planning, purchasing, finance control.'
Initially, the interchange of information and ideas that is at the heart of this successful
Alliance was one-sided. Unquestionably, Renault gave more to Nissan, than vice versa.
Nissan, after all, was almost bankrupt. Big changes were necessary. 'We knew we had to
change,' says Shiga. 'We knew we needed help. This was well understood. The Japanese are
very pragmatic people.'
'Of course there were some concerns that we would not be treated as equals,' says Itaru
Koeda, currently honorary chairman of Nissan, and a key person in early Alliance
negotiations. 'Renault was not a big name in Japan. It was not regarded as a leading
company. Yet we were confident Renault was the best prospect for Nissan, because of
the partnership it offered. A key strength and source of confidence was the Alliance
charter, signed in July 1999. The charter consists of three essential points. It respects the
individual brands, it ensures that Renault and Nissan had individual responsibilities for their
own companies, and it insisted that all decisions involving both companies were "win-win"
situations for both brands. Projects that might benefit the Alliance collectively but which
would damage one of the brands were rejected. It must be win-win.'
'Like some of my colleagues I went to Japan in April 1999,' says Patrick Plata. 'We traveled

the world to look at the Nissan network, from Mexico to Thailand, from Japan to England,
every time asking Nissan people what was wrong, what do you think should be done? We
wanted to really find out what Nissan people thought.
'The problems were identified by many of the Nissan people. Namely, the poor brand
reputation, weak design, decision making on wrong criteria - too much on costs and not
enough on revenue. Plus they were signing off cars that were not going to make money. They
used the wrong metrics. There was also no proper product planning. The cars were
engineering driven - sometimes engineering for engineering's sake - not customer driven. They
did not identify customer wants, and try to meet them.
'The balance between commerce and engineering was just not right. They have to be equal sales and marketing, product planning, engineering, design. Nissan was not good at customer
research, at asking their customers what they wanted out of their cars, what they dreamt to do
in their cars.
'They spent too much time looking at Toyota and Honda; they were obsessed by them, worried
about them. They didn't go their own way.
'I became a Nissan person, we all did. We didn't work for Renault, though we knew they
were a large shareholder, we worked for Nissan. Ninety-nine percent of what I did was
consensual. I didn't thump the table and tell my Nissan colleagues what to do. That
never would have worked. I explained. Forming a consensus is part of Japanese
management. That is exactly what we all tried to do. They are a very clever, very pragmatic
people. They understood.'
The product development teams changed. The European model, of a single program
director responsible for the whole car - including, crucially, its ability to turn a profit - was
introduced. Yet Nissan modified the European model by giving more power to the chief vehicle
engineer, allowing the program director - though still responsible to the CEO for delivering the
car - to concentrate more on the commercial side. This model has now been adopted, in turn,
by Renault.
Renault purchasing skill leads to first notable savings for Nissan
Carlos Ghosn said the first notable cost reduction for Nissan was in purchasing. Ghosn took
Bernard Rey, from Renault, to try to improve Nissan's purchasing situation. Renault had a
clear advantage in purchasing. Benchmarking costs made this obvious. Nissan was paying
20-25 percent more, in general, for similar parts. Within three years, Nissan's purchasing costs
were cut by 20 percent.
Savings began almost instantly. Says Rey: 'We opened the door to new suppliers, many from the
West, and told our current suppliers: "please understand you now have competition.'
'Before the Alliance, Nissan had a typical Japanese purchasing model,' says Hiroto Saikawa,
executive vice-president for Japan, Asia Pacific region, industrial machinery, marine, affiliates
and purchasing for Nissan. 'Nissan had many affiliates in which we had crossshareholding from which we bought components. It was a very soft purchasing strategy.
After the Alliance, this all changed - they went from being business affiliates to business
suppliers. Unlike before, there was no cross shareholding. We were very open to new suppliers.'
According to Mr. Saikawa, $1.78 billion savings in total synergies were identified when the
Alliance was formed, much of it in purchasing. In fact, the Alliance saved that in only three
years.
Combining Nissan and Renault's requirements led to further savings, through economies of
scale. That's the reason that RNPO - the Renault Nissan Purchasing Organization was set up in 2001, to negotiate jointly for the Alliance partners. Headquartered jointly
in Paris and Tokyo, RNPO joint purchasing strategy has led to a further savings,
according to Odile Desforges, who was then chairman of RNPO and senior vicepresident for purchasing at Renault and is now executive vice-president, engineering and
quality. 'Just before the Alliance, we shared about 25 percent of suppliers. From 2007, it is 65
percent. We save money in two ways. First, if we share a supplier, we can negotiate a better

rate. Even better is when you have a common component - then you can get big savings.
And now, 100 percent, all Renault and Nissan purchasing is handled jointly by RNPO.
'Purchasing now uses a new model, partly Renault-based - but what's interesting is how much
Nissan has contributed,' says Desforges. 'Nissan took our process and implemented it better.
They made our processes work properly. Renault in turn looked at how Nissan did this, and
now our purchasing processes work far better than they did before 1999. It's a good
example of benchmarking and transparency and how it has helped both companies.'
In some areas of purchasing, Nissan historically did better than Renault. Desforges
cites the examples of spending on dies, for manufacturing. 'We want to cut Renault's spending
on dies by 30 percent by 2009,' she says. 'We know this is achievable. We know this, because
that is what Nissan is paying.'
'No new model will be developed that does not make money'
In 1999, 43 of the 46 products Nissan sold in Japan were unprofitable. 'It was crazy,' says
Thierry Moulonguet, now chief financial officer of Renault, and one of Carlos Ghosn's selected
team who went to Tokyo to try to turn around Nissan. 'There was very poor financial
management and discipline. Carlos Ghosn made it clear that no single new model would be
signed off that did not generate a profit. Finance needed to be central to the company. In
1999, it was peripheral. Engineering and HR [human resources] were actually at the
centre of the company. The goals were to make cars that the engineers admired and to keep
harmony within the workforce. But the Japanese management were very willing to change.'
Carlos Ghosn's first clear commitment - the Nissan Revival Plan
Unlike many car companies, Nissan - under Carlos Ghosn's management - made firm
commitments. Mr. Ghosn said if he failed to deliver on these commitments, he would
resign. His first commitment was introduced in Tokyo in October 1999, six months after the
Alliance was signed - the Nissan Revival Plan. He listed Nissan's weaknesses as:

Lack of profit orientation

Not enough focus on customers

Lack of cross functional lines (too may management 'chimneys')

Lack of a sense of urgency

No shared vision or common long-term plan

He said, during the presentation, that these weaknesses presented clear

opportunities for progress. After all, Nissan had many strengths. In his presentation,
Mr Ghosn mentioned these strengths as:

The company's international presence and global reach

Its world leading manufacturing system

A leader in certain technological fields

Its new Alliance with Renault

The quality of its people

The goal, he said, was profitable growth. He announced ambitious cost reductions,
including the loss of 21,000 jobs, the closure of three assembly plants, Murayama, Shatai Kyoto
and Aichi Kikai in Minato - and two powertrain plants (Kurihama and Kyushu). Manufacturing
capacity utilization would increase from 53 percent to 82 percent. Purchasing costs would be
cut by 20 percent in three years, with a 50 percent reduction in the number of suppliers.
Mr Ghosn gave a clear commitment that Nissan would return to profitability in the 2000 fiscal
year and would show an operating profit of over 4.5 percent by the 2002 fiscal year. If he
failed to deliver on these commitments, he and his senior team would resign.

'We made the announcement in October 1999, and yes I was worried at first,' says Philippe
Klein, executive vice-president for plan, product planning and programs for Renault. Klein
also worked in Nissan from 1999 to May 2003 and 2006 to August 2008. 'It was a massive
plan, an ambitious plan. The 2000 fiscal year began less than six months later ! But by April or
May, the cost reductions were really kicking in. It was clear to all of us that this was going to
work, that the Alliance would be a success.'
Nissan executives were also impressed by the new ex-Renault directors' attitude. 'They knew
Nissan very well.' says Tadao Takahashi, former executive vice-president for manufacturing
for Nissan. 'They really did their homework. They learnt about us. It was most impressive. Of
course at the beginning there was a worry that it would not be an equal partnership. This is
natural. But gradually we understand Mr. Ghosn's intentions really were "win-win" - in other words,
wins for both brands.'
Cross-functional teams: a hallmark of Carlos Ghosn's management style
Carlos Ghosn and his new management team wanted to cut down the 'chimneys' that existed
within Nissan. 'We wanted to tear down the walls that reduced a collective enterprise to a
congregation of tribes,' says Ghosn. 'It was essential people talk to each other, listen to each
other and learn from each other.'
Nissan's new management set up a series of cross-functional teams (CFTs), a device Ghosn
had used with great success on previous company turn-arounds. 'They were a key to the
success of the Nissan Revival Plan,' says Ghosn.
Nine cross-functional teams were set up, covering the spectrum of reforms that the
management team needed. This included business growth through new products,
services and markets; purchasing, which represented 60 percent of Nissan's costs;
manufacturing; and finance.
The CFTs had a huge impact on the goals for the Nissan Revival Plan, and Nissan's
subsequent business commitments. They still form a key part of Nissan's and Renault's
management.
Finance - from peripheral to a priority
'Improving the financial health of Nissan was a top priority,' says Ghosn. 'Until 1996, Nissan had
no chief financial officer - which is amazing.' Ghosn brought Thierry Moulonguet over from
Paris, as Nissan's CFO. His team's first decision was to centralize all financial functions in
Tokyo. Before, they were scattered around the world. Debt in many overseas countries,
where interest rates were much higher than in Japan, was costing Nissan a fortune.
"Our management and employees are now all focused on profit,' says Joji Tagawa,
corporate vice-president for investor relations and treasury for Nissan.It is a big change.'
Equally, Nissan was poor at investor relations. 'At the beginning of the Alliance, we didn't have
an investor relations department,' says Tagawa. 'We had a couple of people doing it as a side job
but neither of them spoke English. Our activity outside of Japan was extremely limited.
We now communicate with global investors very much better. We now know that our share
price matters.'
Sales and marketing - separate dealers but sharing back office functions
The strong helping the weak is a principle of the Alliance. 'In France, Renault dealers are
strong and Nissan dealers were generally weak,' says Patrick Blain, Renault's executive vicepresident for sales and marketing from 2005 to 2009. 'Gradually Nissan sales moved to
Renault dealers. Naturally, they have separate showrooms and separate branding. There will
be no joint dealers. But they may be next to each other, thus saving money on land costs. In
Europe, about 30-40 percent of our dealer network now sells both Renault and Nissan,
although always from separate showrooms.'

Renault, which is strong in Romania thanks to its Dacia business, helped Nissan to grow in that
country. Conversely, Nissan helped Renault to re-establish itself in Australia. 'Where one
member of the Alliance is much stronger in a certain country, so it will help its partner,' says
Blain. 'This is obvious.'
In Europe, we share parts warehouses. Normally we use the Renault warehouses because in
Europe they were generally stronger. But in Britain, Nissan's warehouse was better - so
Renault UK now uses it.

THE KEY IS LEARNING FROM EACH OTHER

Complimentary cultures and skills result in 'win-win' situations for both companies
There are many examples of the Alliance partners helping each other, improving quality and
reducing costs.
'Learning from the Japanese manufacturing model was clearly going to be one of the big benefits,
for Renault, in an Alliance. 'We all knew that the Japanese had a sizeable advantage over
European and American manufacturers in their production systems,' says Michel Gornet,
executive vice-president for manufacturing and logistics for Renault. 'The Japanese had better
quality and better productivity. 'Before the Alliance, we used to go to Japan to try to
benchmark their systems. But we were only shown what the Japanese wanted us to see. So we
learnt very little. We only saw the tip of the iceberg. Once the Alliance started, we asked and
we got answers. We established our first manufacturing CCT (cross company team) in August
1999, to study the Nissan method but also to look at ways of improving it. Obviously
Renault's advantages in this area were also benchmarked and discussed. The Renault Production
System, which is the standard used by all the Renault plants over the world, borrowed
extensively from the Nissan Production Way. Our productivity has improved by 15 percent.
Quality has also improved substantially.'
It was a similar story on engineering. Learning from Nissan, Renault now develops cars faster
and cheaper - and to higher quality levels. About twenty Nissan engineers now work at Renault
on long-term assignments; a similar number of Renault engineers reciprocate in Japan.
Carlos Tavares, former executive vice-president for design, corporate planning, product
planning and market intelligence and now Americas region for Nissan, previously in charge of
development of the Mgane range at Renault, says Renault learnt from Nissan, 'an organized,
steady and robust way to deliver products to the market. At Nissan, after you finalize the
contract two years before the car launch, it all goes so smoothly. The contract is robust, the
functions supporting the program director are robust, and any problems are a non-event. It just
goes so smoothly. Renault has improved a lot in this area in the last three years, all thanks to
Nissan benchmarking.
'When you come to Nissan at the beginning, the process seems very slow, the decision
making takes time. They take a long time, initially, because they double check, do exhaustive
evaluations, and all of this takes time. But it gives confidence to the people. When they commit
it happens. And then it happens fast.'
'Renault taught Nissan about true customer-focused products,' says Toshiyuki Shiga. 'Our
product planning improved, our skills at designing cars to meet customer demand were
enhanced. We had some excellent cars, but they were the result of what we - and especially
our engineering department - thought were appropriate rather than what our customer wanted.'
Renault executives working for Nissan in the early days of the Alliance persuaded Nissan to
give more power to the design department. A new design director, Shiro Nakamura, was
hired. Nissan's designs have since blossomed in creativity and distinctiveness. The Nissan
design team is now frequently sited as being among the most influential car design
departments in the world.
'Renault was much more focused on costs, revenue and profits,' says Joji Tagawa,
corporate vice-president for treasury and investor relations at Nissan. 'In the past Nissan's focus
was everywhere - sometimes sales, sometimes market share, sometimes engineering
satisfaction. Everyone is now profit driven and that is a huge step forward.
Renault's purchasing costs, for like-for-like components, were 20-25 percent lower than
Nissan's. 'In three years, Nissan reduced its purchasing costs by 20 percent,' says Odile
Desforges, - which now jointly sources all Renault and Nissan purchasing requirements.

Nissan learned from Renault how to manage the cost price per vehicle in the production line
development as well as how to introduce ergonomically-friendly production methods for
line workers which was a weak point in Nissan manufacturing. Today, both companies
share Key Performance Indicators which enabled the companies to work more closely.
Separate companies, separate management, complete independence
Carlos Ghosn is one of very few executives working over both companies. That is where the
Alliance is different from all other companies who have merged, acquired or been
acquired. Renault and Nissan are separate companies, with separate
management and separate headquarters. They are independent. Different engineering
departments, design departments, manufacturing operations (though shared in some smaller
markets) and marketing departments - all autonomous. Only in purchasing, information
technology (IT) and, more recently greenfield manufacturing sites, do the two partners
share some employees and management. Even here, employees - though servicing both
members of the Alliance - continue to be specific Nissan or Renault employees.
'In mergers and acquisitions - the typical motor industry model for growth - there is usually a
winning company and a loser, 'says Carlos Ghosn. 'One big company tries to influence a
smaller company. There is cultural incompatibility and resentment. This is why almost
all the recent motor industry mergers and acquisitions have failed.'
Adds Toshiyuki Shiga: 'In a takeover, there is great difficulty in motivating employees of the
company that has been bought. It's hard to stay motivated when you're no longer your own
masters.'
Benchmarking and transparency lead to savings
'The Alliance, uniquely, has succeeded because it respects the individuality and independence
of Renault and Nissan,' says Ghosn. 'Yet we also share best practices through total
transparency between the two companies and numerous cross company teams (CCTs).
This arrangement transfers knowledge, technology and processes to whichever partner
is in need, but it also allows the Alliance partners jointly to develop new and superior
technologies and working processes by pooling experience.'
Benchmarking and transparency have led to substantial savings for both Alliance partners- B
and C common platforms have been developed. New engines are also shared. Nissan
increasingly takes the lead in developing new gasoline engines; Renault takes the lead with
diesels (both reflect their core engineering competencies). Yet engines are tuned differently
in their Nissan and Renault applications, drive differently, and behave differently, reflecting
brand and market priorities.
Equally, the sharing of some platforms does not hurt brand differentiation. 'Look at the Bplatform,' says Patrick Plata, 'The Nissan Micra (March in Japan), Cube, Note and Tiida all
use the B-platform. So do the Renault Clio and Modus. Yet they are all very different cars,
aimed at different customers. The Renault and Nissan models have at least as much
brand differentiation as Renaults and Nissans made before the Alliance began. This is very
important.'
Adds Carlos Tavares, 'We want to use Alliance platforms to create shareholder value and
increase customer satisfaction through better value and quality. But the designs will be
different, the cabins will be different and the cars will behave in different ways - look how
diverse Clio and Micra are. All the upstream creative work is separate - the product planning,
the customer targeting, the design, the research and development, all completely separate.
Yes we share some very important hardware. But through unique tuning and the huge scope
that electronics gives us to differentiate, they will not only look like totally different cars, but they'll
also drive and behave differently.'
This sharing of platforms gives huge financial savings. 'It means we can save about 50
percent of our engineering development costs: one platform to be used over two companies,'
says Mitsuhiko Yamashita, Nissan's executive vice-president for research, development

and total customer satisfaction function. 'It gives enormous economy-of-scale advantages.'
Shared platforms are one of the resources used by the Alliance, together notably with
interchangeable components, to make economies of scale and reduce development and
production costs.
The policy of interchangeable components consists in using the same components or interfaces
for several models, in different segments and on different platforms, while retaining the identity of
each brand and the features of each vehicle. It is applied for parts that the customer neither sees
nor touches, including engines, gearboxes, heating, ventilation and air-conditioning systems,
brake systems, seat structures, and wiper motors.
Sharing of resources also expand to the area of environmental technology. Each partner takes
the lead on a specific technology and places it at the disposal of the other. Nissan is working on
fuel cells and hybrids. Meanwhile Renault is working on diesels and flex fuel. Both
companies are also collaborating on electric vehicles.
Unlike rival companies, who look at what suits the controlling group, the Renault- Nissan
Alliance only agrees to actions that result in a 'win-win' situation for both companies. 'If the
Renault-Nissan Alliance collectively benefits from a decision, but one of the partners loses,
then the answer is an automatic "no",' says CEO Carlos Ghosn. 'There are never any losers.
Unless it's "win-win" we don't proceed. That's another key difference between our Alliance and
rivals.'

10

HOW THE ALLIANCE WORKS

Two individual and separate global companies linked by cross share holding and
a common ideal

Renault owns 44.3 percent of Nissan, Nissan owns 15 percent of Renault

An Alliance Board, with Carlos Ghosn as president, manages synergies

and coordinates global joint activities
RNPO (Renault Nissan Purchasing Organization) is the largest joint venture
company, now responsible for all Alliance purchasing
Cross Company Teams (CCTs) explore new opportunities and synergies
over all major functions
Regionally, the stronger distributor or sales company helps the partner
company
The Renault-Nissan Alliance is a unique motor industry partnership that ensures separate
managements, corporate cultures and brand identities, yet allows both companies unlimited
access to benchmarking and provides a rich information flow both ways. The stronger
company helps the weaker in almost every area. 'In the motor industry you need to be good in
thousands of areas, and no company is best - or even very good - in thousands of ways,'
says Patrick Plata.
'I'd say the French and Japanese have very different cultures and skills, and they are very
complementary. Add those skills together and you get very great capability. It's a source
of great competitive advantage for the Alliance, and a key reason for our commercial success.'
Improving global sales by allowing the strong regional partner to take the lead
Together, Renault and Nissan have complementary global footprints. Nissan is strong in
Japan and North America, and through most of Asia. Renault is stronger in Europe,
South America and North Africa. The stronger company helps its Alliance partner
establish itself in a new region, or increase sales there.
Renault is helping Nissan in Europe, by using Renault's distribution system in many markets
and also many of its dealers (though always from separate Nissan showrooms). In Eastern
Europe, Renault's strength in Romania - partly through its Dacia affiliate - has helped Nissan
enormously. Renault's Brazilian factory now makes Nissan passenger vehicle and light
commercial vehicles, and Nissans are now sold by Renault dealers in Brazil. In Argentina,
Renault became Nissan's importer.
Conversely, Nissan has helped Renault throughout Asia Pacific; in Australia, for example,
Nissan took responsibility for re-establishing Renault. In South Korea, many new Renault
Samsung vehicles are derived from Nissans, and have Nissan technical input. In the
Middle East, Nissan helps Renault.
In Mexico, the Clio is made in a Nissan factory. 'Before the Alliance, Renault did not sell
vehicles in Mexico,' says Patrick Blain. 'Yet Nissan is very strong in Mexico. So Renault
vehicles are now made by Nissan and sold by Nissan dealers in separate showrooms. By
2004, the Alliance became the largest car group in Mexico.' In January 2009, Nissan started to
build the Renault Sandero. This is the most-recent example of collaboration in terms of
production between Renault and Nissan.
The Alliance Board steers strategy and co-ordinates joint ventures and activities
Nissan and Renault, headquartered in Tokyo and Paris respectively, have separate
managements, running their individual operations through their respective executive

11

committees, accountable to their shareholders as well as their board of directors.

Yet each partner has a substantial stake in the other, meaning that each has a direct interest in
the performance of its partner.
To define a common strategy and manage all synergies, an Alliance strategic management
company - jointly and equally owned by Nissan and Renault - was founded in March 2002. This
company, Renault-Nissan bv, set up under Dutch law, hosts the Alliance Board, which holds up
to 10 meetings a year. The Alliance Board is headed by Carlos Ghosn, president of the board,
and includes three Renault executive vice-presidents and three Nissan executive vicepresidents. Other members of the Renault Group Executive Committee and Nissan
Executive Committee (the two companies' most senior directors) also attend Alliance Board
meetings. The board steers the Alliance's medium and long-term strategic objectives and coordinates joint global activities.
The Alliance's two joint venture companies, Renault-Nissan Purchasing Organization
(RNPO) and RNIS (Renault Nissan Information Services, responsible for IT), also
report direct to the Alliance board. All other departments in Nissan or Renault are brand specific.
Renault-Nissan Purchasing Organization - the first and biggest Alliance joint venture
company
RNPO is easily the largest joint venture company in the Alliance, and employs 300 people
collectively in Tokyo, Paris and in Farmington Hills, Michigan, USA (alongside Nissan's North
American technical centre). It deals on both Nissan's and Renault's behalf and its joint purchasing
activities are now responsible for all Alliance purchasing turnover from April 2009. However,
Renault and Nissan still have separate purchasing departments, dealing with brand-specific
purchasing requirements. So RNPO by no means replaces Nissan's and Renault's individual
purchasing departments. Rather, it supplements them. RNPO employees are specifically
employed by either Renault or Nissan. 'Yet all employees are empowered to work for both
Alliance members,' says Desforges. They have both companies interests at heart and know
never to put one company's interests above the others. It is always win-win.'
Joint teams and committees hunt for new opportunities and greater synergies
Also reporting to the Alliance Board are the Renault and Nissan Coordination Bureau, small
teams working in Paris and Tokyo that coordinate all alliance activities - including the work of
the various Steering Committees (SCs), Cross Company Teams (CCTs), Functional Task
Teams (FTTs) and Task Teams (TTs).
The Steering Committees, chaired by a member of Renault's or Nissan's executive committee,
propose the priority subjects for the Alliance Board meetings, oversees the activities of the
CCTs, FTTs and TTs, and help implement Alliance joint projects.
The key groups that explore new opportunities and synergies are the CCTs (Cross Company
Teams). As the name implies, they are made up of employees of both companies. These teams
are the crucial management tool that enables the individual strengths of Nissan and Renault to
complement each other. They are also responsible for implementing action plans, assisted by
the Steering Committees.
Employees will join a CCT for typically two to three years, and the composition of the teams will
change, as new challenges arise. CCTs cover all the major areas of both companies. They
include product planning, research and advanced engineering, vehicle engineering, powertrain
engineering, manufacturing, purchasing, plus there are CCTs covering all sales regions and
exploring greater synergies between the two companies. CCT members, working in Tokyo,
Paris and at other Alliance facilities around the world, communicate daily with each other
(typically by email), usually have weekly conference calls and normally meet, face to face, once
a month. Team leaders report to the Alliance Board, with progress in their specific areas.
Functional Task Teams (FTTs) assist the work of the CCTs. Task Teams (TTs) help CCTs with
specific assignments, and work on the task until it's accomplished.

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'When we have an opportunity or a problem, we'll typically go through the pilot of the CCT,' says
Robert Ferraris, former secretary of the Alliance Board. 'They talk together. They try to promote a
new synergy or program, or they'll try to solve an issue that cannot be agreed.
'If an issue cannot be solved at the CCT level, it will be addressed by the appropriate
Steering Committee. If that cannot be solved, it will go to the Alliance Board meeting.
'Ours is a truly unique way of working,' says Ferraris. 'It encourages dialogue and cross company
team work, and brings out the best in both cultures. It enables Renault to learn from Nissan,
and Nissan from Renault. It encourages an Alliance team spirit. Yet it also respects the
fundamental differences between the two independent companies.'

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THE ALLIANCE: A WORLD LEADER IN ZERO EMISSIONS

Electric cars can transform our industry, and we are playing a leading role in this
change
-- CARLOS GHOSN
The Renault-Nissan Alliance moves into its second decade determined to become the world
leader in zero emission vehicles. To get there, it is drawing on years of work behind the scenes
by the two partners. In particular it is able to use its extensive experience of working together in
engineering and purchasing to deliver affordable and exciting solutions to the environmental
challenges facing the car industry worldwide.
Among the highlights of 2008 were significant announcements on low-emission and zeroemission technology.
The Alliance is developing fuel cell-powered electric vehicles with two prototypes currently in an
advanced engineering phase which were showcased in a series of roadshows across Europe:
Nissan's pioneering X-TRAIL fuel cell vehicle has been undergoing 'real- world' testing
for more than two years, with examples leased to government authorities in Japan.
Renaults prototype Scenic ZEV H2, based on a Renault Grand Scenic, is a joint
Alliance development. It features Nissan's in-house developed fuel cell stack, highpressure hydrogen storage tank and compact lithium-ion batteries. Renault engineers
and technicians prepared the Grand Scenic architecture to accept the different FCV
elements under the floor, thus managing to keep ample cabin space for five adults, and
to integrate Renault and Nissan electric and electronic systems.
All electric vehicle initiatives globally are Alliance initiatives
The first to be announced was in Israel where, for the first time, all the conditions necessary for
electric vehicles to be successfully mass-marketed will be brought together in a partnership
between the Alliance, Better Place and the Israeli government. The target date is 2011. Renault
will provide the vehicles and their lithium-ion batteries will be provided by Nissan through its
Automotive Energy Supply Company joint venture. Since then, similar initiatives have been
announced for Portugal, Denmark, the state of Tennessee and with other regions or
organizations, totalling nearly 20 by the end of March 2009.
At the Paris motor show in October 2008, Renault rolled out the Z.E. Concept (Zero Emission
Concept) giving a preview of the companys zero emission mobility using a lithium-ion battery
pack from Nissan.
Elsewhere the Alliance is using its knowledge and expertise to help with other sustainability
projects like that in Yokohama, Japan, or France (EDF) where the Alliance has announced
partnerships to study sustainable mobility solutions.
The Renault-Nissan Alliance made a strategic commitment to lead the global automobile
industry in mass-marketing zero-emission vehicles. We are preparing a car that will be neutral
to the environment transportation without guilt over the environment, says Carlos Ghosn.
We are emphasizing zero emissions. Its a territory we want to own, and we are taking all the
initiatives necessary to make it happen.
Carlos Tavares, Nissans executive vice president of corporate and product planning, adds:
The Alliance, will become a global leader in zero-emission vehicles.
According to Mr. Ghosn, the ability to mass-market EVs on a global scale is a differentiator
between the Renault-Nissan alliances approach and that of other automakers. Electric cars
can transform our industry, and we are playing a leading role in this change. We became
involved from the beginning, we are taking a position, we are investing, we are developing
technology, and we are securing the patent and intellectual property around the battery. We

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want to make sure that Renault and Nissan will come first and be leaders in a very promising
technology.
The electric vehicle Nissan will introduce in 2010 will have a unique body style. By 2011,
Renault will offer a Kangoo type LCV, a family sedan and by 2012, an urban electric car.
The EV will have a driving range of 100 miles (160 kilometers) on a single charge. Future
generations will have an autonomy range that will be steadily improved as battery development
continues.

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Contact in Renault
Media site : www.media.renault.com
Renault press: +33 (0)1 76 84 64 69

Contacts in Nissan
Media site : http://press.nissan-global.com/EN
Nissan Motor Co., Ltd.
Communications CSR Department
Corporate Communications Group
Phone: +81 (0)3 5565 2141
Alliance Communications Group
Phone: +81 (0)3 5565 2134
Nissan North America, Inc.
Corporate Communications
Phone: +1 615 725 1450
Nissan Europe S.A.S.
Communications Department
Phone: +33 (0)1 30 13 57 87

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