Renault Nissan

Renault Nissan Case Memo

Executive Summary

Renault and Nissan are two automotive companies that joined alliances in 1999. The French Company and the Japanese company came to an agreement involved in joint ventures with Nissan holding 15%shares in Renault and Renault holding approximately 44% in Nissan. Renault was the 9th largest automaker in the world with 4.3% market share that struggled to make a strong presence outside the European market. Nissan was suffering from major financial problems even though it produced excellent quality cars. While Nissan had shown potential growth, Renault had taken a turn for the worse. By keeping the Nissan and Renault brands and products identities different both companies would be able to benefit post the alliance.

Company Overview

Renault, once owned by the French state, became a limited company in 1990 and was finally privatized in 1996. Renault had a complete product range, from, small to large passenger cars, including minivans, trucks, and buses. Renault heavily depended on the European market, responsible for over 90% or revenues in 1998. Overall the company sold 2.2 million vehicles worldwide in 1998, making it number ten within the industry. Renault did not have a presence in Asia and it would have been very difficult to enter this market on its own. Renault lacked engineering and productivity skills needed to meet global benchmarks.

Yoshisuke Aikawa established Nissan in 1933. In 1999, Nissan experienced its 26th and 8th straight year of losing market share in it home market and global market, respectively. Only four of its 43 models were profitable and it had an excess capacity of 50% . Nissan’s culture was that of complacency and there was a lack of urgency. There was no cross functional and cross regional communication. The design of the cars was out of touch with the market. There was a bureaucratic culture rooted into the organization that made implementation of change very difficult....