Renault-Nissan-Daimler alliance expect to save billions of euros

Article by Christian Andrei, on August 29, 2010

An equity-swap alliance by Renault SA, Nissan Motor Co. and Daimler AG would lead to billions of euros of savings due to the sharing of development costs, according to two insiders.

They also revealed that these carmakers aim to sign the agreement as early as this Wednesday in Brussels. Under this deal, there will be cross-shareholdings from 3% to 4%.

These sources also talked about a plan to share development costs for platforms and technologies including powertrains. Koji Endo, managing director of Tokyo-based Advanced Research Japan, said that sharing the investment burden makes total sense and that this will help the financials of these automakers.

Endo added that since the demand for small cars is anticipated to be strong, it's likely that the partnership will result to improved profitability.

The carmakers would also be able to save costs in the development of fuel-efficient technologies, which are necessary to meet stricter environmental regulations. The deal will result to new models for emerging markets, including China and India.

Actually, other carmakers have entered similar tie-ups, with Volkswagen AG and Suzuki Motor Corp. entering into an agreement earlier this year and Fiat SpA move to take over Chrysler Group LLC last year.

It can be recalled that in 1999, Renault purchased a controlling stake in Nissan, which was on the brink of bankruptcy.

The sources said further that these three carmakers 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. No one from Nissan, Daimler, or Renault, has commented on these reports.

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