Nissan – Daimler (DAI) Alliance will Save Billions – Sources Say
Last month it was reported that Renault SA, Nissan Motor Co. and Daimler AG (NYSE: DAI) were entering a cross shareholder agreement to hold less than 5% stock in each other’s company.
Today, Bloomberg is reporting that Renault SA, Nissan Motor Co. and Daimler AG expect to save “billions of euros” by sharing development costs as part of an equity-swap alliance. The source are two people with direct knowledge of the talks, who declined to be identified.
The automakers aim to sign an agreement that will include cross-shareholdings from 3 percent to 4 percent as early as April 7 in Brussels.
The three companies plan to share development costs for products including small cars, luxury vehicles and commercial vehicles, as well as conventional gasoline-engine, diesel, hybrid, electric and fuel-cell technology. Daimler’s Smart minicar and Renault’s Twingo model may share key components in the future, while Daimler’s Mercedes- Benz may supply powertrains to Nissan’s Infiniti luxury brand, the sources said.
“It makes total sense for the automakers to share the investment burden and will help their financials,” said Koji Endo, managing director of Tokyo-based Advanced Research Japan. "The partnership will deliver improved profitability in small cars, where demand is projected to be strong," he said.
Other recent auto industry tie ups are Volkswagen AG and Suzuki Motor Corp., and Fiat’s takeover of Chrysler last year.
Renault - Nissan, Japan’s third-biggest automaker, tried to form an alliance with GM in 2006, but the talks were unsuccessful. Carlos Ghosn, Nissan Chief Executive Officer has a history of entering these kind of automotive cross alliances. Renault owns 44 percent of Nissan, which in turn owns 15 percent of Renault.
Whether or not the so called "un-named sources" are exaggerating the billions in cost savings, the Daimler-Nissan alliance will make the auto industry even more competitive.
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