Official: Renault-Nissan Alliance and Daimler AG announce strategic cooperation

Following an earlier report this week, Renault-Nissan and Daimler have now made their intentions official, announcing what they are calling a broad strategic cooperation. The move will result in the automakers exchanging 3.1 percent stakes in their new respective partners.

In an effort to utilize greater economies of scale, improve product offerings and increase the competitiveness of products offered by both Renault-Nissan and Daimler, the automakers have agreed to form a wide-ranging strategic cooperation.

Equity swap explained
In order to properly underscore the new commitments by the automakers, Daimler will receive 3.1 percent of Renault through the release of new shares, 3.1 percent of Nissan through existing shares and Renault will receive 3.1 percent of Daimler shares. Independently, Renault will also exchange 1.55 percent of its Daimler shares with Nissan in exchange for 2 percent of Nissan shares. As a result, Renault and Nissan will each hold a 1.55 percent stake in Daimler treasury shares.

Joint gains from the strategic cooperation
As part of the new strategic cooperation, Daimler's successor to the Smart ForTwo and Renault's successor to the Twingo will be jointly developed and engineered to share the same architecture. Because of this, both vehicles will retain the unique use of rear-wheel drive for the segment, but each product will contain strong differentiations in product design and exterior design language. The launch of the jointly developed models is expected to begin in 2013.

The joint development of these two vehicles will provide significant cost savings to both automakers, providing for a truly mutually beneficial arrangement.

Mercedes-Benz and Renault-Nissan will also utilize close cooperation to design commercial vehicles, including a new Mercedes-Benz van set to enter the market in 2012.
In addition to small commercial vehicles, the plans also call for the sharing of components in mid-size van product offerings - including small diesel engines and transmissions from Renault-Nissan for Mercedes-Benz. The arrangement is expected to deliver increased economies of scale to both automakers.

What Daimler aims to gain
Daimler CEO, Dr. Dieter Zetsche, said, "Daimler and the Renault-Nissan Alliance are combining common interests to form a promising foundation for a successful, strategically sound cooperation that is based on a number of very concrete and attractive project cooperations. Our skills complement each other very well. Right away, we are strengthening our competitiveness in the small and compact car segment and are reducing our CO2 footprint - both on a long-term basis. We know that we can make brand-typical products based on shared architectures. The individual brand identities will remain unaffected."

Daimler will look to gain both three and four-cylinder gasoline and diesel-powered engines from Renault-Nissan, which will then be modified in order to "reflect Mercedes' characteristics." This will provide for substantial development savings to Daimler, as well as increased economies of scale for producing the small engines for Renault-Nissan.

What Renault-Nissan aims to gain
CEO of the Renault-Nissan Alliance, Carlos Ghosn, said, "The Renault-Nissan Alliance knows how to work successfully in collaborative partnerships, and this experience is extremely valuable in today's and even more tomorrow's global auto industry. This agreement will extend our strategic collaboration and create lasting value for the Renault-Nissan Alliance and Daimler as we work on broadening and strengthening our product offering, efficiently utilizing all available resources and developing the innovative technologies required in the coming decade."

Renault-Nissan is set to gain four and six-cylinder engines from Daimler, of both the gasoline and diesel variety. These engines will be destined for use in Nissan's luxury Infiniti branded models. Daimler will gain similar economies of scale benefits from this deal, and Infiniti will gain access to crucial high-performance gas engines and crucial diesel engines for the European market. The plans also call for future joint development of larger engines.

Future plans
In addition to the current planned cooperation, the new collaboration also allows for additional future cooperation between the automakers, including opportunities to co-develop vehicles and technologies relating to electric vehicles.