Pastries and sushi: How Renault and Nissan reset their alliance

LONDON -- The new terms of the alliance of Renault, Nissan and Mitsubishi mean the three companies now have "an open relationship rather than a forced marriage," Renault CEO Luca de Meo told Automotive News Europe after the automakers held a joint news conference in London on Monday.

The setting for the event in the British capital reflected a new-found desire that neither Renault nor Nissan should be seen as the dominant partner in the alliance, especially now the two plan to have an equal 15 percent cross-shareholding.

London was seen as neutral territory for the alliance. Although the UK is in Europe and not Asia, it's not in France, and it’s Nissan’s sole manufacturing base in the region. The event to announce the revamped alliance was held in the Japanese-themed Nobu hotel, which is famous for its sushi, but French pastries were served.

What was obvious during the event was the rapport that de Meo and Nissan CEO Makoto Uchida have built during frequent conversations as they worked to rebuild their companies' long-established alliance for the modern era. 

The two shared jokes about the difficulties they had to overcome to get their respective companies over the line. "I probably talked to Luca more than my family," since discussions between the two started in May, Uchida said. For his part, De Meo said that the discussions had been "intense."

The CEOs reiterated that it was a "common sense" partnership for a new era that plays to their respective strengths in individual regions.

The projects announced as part of their new relationship include plans for Nissan to build Renault a new model for the Mexican market, where Nissan is the best-selling brand, while Renault will help Nissan expand into Latin America through the use of its Argentinian plant. 

In Europe, the two pointed to Renault’s development and production of a full-electric replacement for the Nissan Micra small car from 2026 with 80 percent commonality with the Renault 5 that is due in 2024.

As the two companies worked through the tangle of frustrations that had built up under the leadership of former CEO Carlos Ghosn, they realized that the fraught subject of intellectual property, or IP, had never properly been established in a legal sense.

'Painful discussion' on IP

"We became IP PhDs," de Meo joked, prompting a big laugh from Uchida. "The benefit of the very painful discussion is that we have a system that that now works," de Meo said. He said the talks "probably solved the large majority of legacy IP" issues, referring to current technologies that could be used by the partners in future projects, including Renault and Geely’s Horse joint venture that will build internal-combustion engines.
 
The idea is that going forward the three companies will only work together if the project makes financial sense for the other, rather than being forced into accepting a partnership. 

The new agreement, in which Renault and Nissan holds a 15 percent stake in the other with the remainder of Renault’s share in Nissan – 28 percent -- held in trust, changes their relationship to a "normal simple legal situation between partners that want to work together," Renault Chairman Jean-Dominique Senard said at the London event.

The atmosphere between Uchida and de Meo at the London event was one of competitive friendship, and that’s what the new agreement is supposed to foster. To win the participation of the others in a project, the partner first has to make a convincing case for the financial benefits. 

The proof will be seen in forthcoming collaborations. The problem with open relationships is that they often break down if outside partners prove more compatible. A divorce could still be on the cards.