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Nissan-Renault alliance braces for make-or-break venture

Once the largest automotive group in the sector, the Renault-Nissan alliance has encountered several bumps along the way in its 20 years of partnership. The cultural differences and unwillingness to subordinate have been the main underlying issues in the operational functioning of the alliance. Although the current delicate situation that the company is facing after the arrest of its former CEO and the pandemic crisis, may have finally made both parties realize the need to work more efficiently together. The premier of Nissan’s new electric SUV, Ariya, may serve as a statement of future cooperation between the French and Japanese giants. The new EV platform featured in this new SUV has been co-developed by both engineering teams, and it is expected to be part of all new electric models launched by any brand in the alliance.

The new “leader-follower” system put in place recently in the Renault-Nissan alliance, aims to extinguish some of the operational disputes that have hampered the potential of the partnership in the past. This system of work distribution and role assignment, is meant to make all the resources of the alliance available for the primary automaker in each region and segment. Also, since the role of primary maker is set beforehand for every region and segment, product development should move forward more efficiently as the follower company is dedicated to support the leader company, and the latter is the only firm involved in decision-making.

Although the new system will let the company to reduce operational costs, the alliance has designed a cost-saving plan to cope with the current turbulence in the automotive market. Altogether, it expects to save around $5bn by limiting vehicle production for the less profitable models, closing and repurposing plants, and slashing significantly its workforce. With all the uncertainty surrounding the pandemic outbreak, automotive companies will need to react quickly to the challenges that may occur due to future outbreaks. While most of the competition have a clear leadership and a tested operational strategy, the alliance will have to face one of the most difficult times in the automotive market without any of the aforementioned strengths.