AUTO ALLIES Partners Under the Hood

French-Japanese carmaker Renault-Nissan and Mercedes producer Daimler plan to expand a partnership that could include both carmakers taking additional stakes in each other’s business. Among the new projects being considered is a collaboration on electric cars.
Daimler CEO Dieter Zetsche, right, and his counterpart at Renaul-Nissan, Carlos Ghosn, initiated the carmakers' cooperation in 2010.

In early 2008 Renault-Nissan manager Jacques Verdonck had an idea —a pragmatic partnership between Renault and Daimler, but without a formal merger.

His brainstorm came to fruition and soon the collaboration, which also includes Renault's Japanese partner Nissan, will celebrate its sixth anniversary. It is already more successful than many mergers, with 13 projects under way and more ideas in the works.

Together with his Daimler colleague Peter A. Trettin, Mr. Verdonck oversees the daily workings of the alliance.

Shared activities include the jointly-developed Daimler Smart ForTwo and Renault Twingo. Now the automakers are going beyond shared engine technology all the way to their first fully mutual venture — a Mexican factory for compact premium vehicles that they are building and will operate together.

Each manufacturer is thinking about the next generation of electric cars. That’s an issue we could address in the partnership. Jacques Verdonck, Renault-Nissan manager

Renault-Nissan will sell the new cars as the Infiniti Q30 and QX30, while Mercedes models will be the CLA and GLA compacts.

Since November, Nissan has produced its premium Infiniti Q30 in England on a Daimler platform for the B and E classes. It brings the partnership closer to the brand identities of both parties, which are to be protected above all.

Mr. Verdonck takes this very seriously. If one observes, for instance, that diesel-powered cars in Mercedes’ A, B and C classes are powered by Renault, he makes a diplomatic correction.

“Daimler adapts the motors to its own vehicles,” he explained. “In the end, it is a Mercedes engine.”

Otherwise there are no limits to the collaboration. The overriding principle is “there are no taboos.”

Mr. Verdonck said as soon as a party submits a good idea, it is examined in a feasibility study. The supervisory committee meets each month under the chairmanship of Daimler head Dieter Zetsche and Renault-Nissan chief Carlos Ghosn. The two chief executives see each other at least 12 times a year.

Each project has its own management, which almost always consist of mixed teams from each of the automakers.

“Renault people worked on up to 80 percent of the new Smart/Twingo vehicles,” Mr. Verdonck said. “The ratio is 50:50 on the current development of a new, fuel-efficient gasoline engine.”

Responsibilities are clearly defined and suppliers receive only one specification, which reduces expenses.

 

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There is a modest, reciprocal capital participation of 3.1 percent respectively, more of a symbolic magnitude. But an increase isn’t out of the question. “No one knows where it will end.”

Even without increased participation, there is an effort to convey to the other party as much information as possible about each company's economic situation. Transparency is key, said Mr. Verdonck.

The collaboration far exceeds mere technology, even if that remains the foundation. Savings through mass production, faster and cheaper development of new technologies and utilization of idle capacities are also core objectives.

Over the years, a trusting relationship has arisen. For example, Renault first presented its new Espace, a mid-size luxury crossover, to a group of Mercedes engineers and requested they conduct a critical quality test.

Entering its sixth year, almost everyone is surprised by the success of the partnership.

“Only a few of our people seriously believed we would achieve so many joint projects with Daimler,” Mr. Verdonck acknowledged.

Each manufacturer has its own tradition. Germany’s Daimler develops a new car or motor differently, for instance, than Japanese-based Nissan or French-based Renault.

“When we start a new project, we decide upon one path and then stick with it,” said Mr. Verdonck. That might be the German, French or Japanese method.

In joint consultation, an opinion is developed about target prices for all components. “The respective project leader then negotiates with the suppliers,” said the Renault-Nissan manager. “We speak with one voice.”

Mr. Verdonck said anti-trust regulators have not voiced objections.

The automotive future belongs to low-emissions, networked or autonomous vehicles. With its new electric Smart, Daimler uses a Renault motor but installs its own battery.

“Each manufacturer is thinking about the next generation of electric cars,” said Mr. Verdonck. “That’s an issue we could address in the partnership.”

 

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His company has worked with Daimler on hydrogen- and fuel-cell technology, but without great success. Mr. Verdonck attributes this to a lack of infrastructure.

On the other hand, thought is being given to networked cars. “Each manufacturer is working on it. As soon as we can start a synergy, we'll do it,” said Mr. Verdonck.

The companies have joined together in appeals to authorities for a set of regulations to help lay out the future for autonomous cars. “For that reason, we must have precise knowledge of the technology of the partner,” said the Renault-Nissan manager.

Going forward, Mr. Verdonck believes the partnership extends past current projects. And he admits there are cultural differences and assertive egos on both sides.

“(But) sometimes we spend more time convincing our own engineers than those of our partner,” the Frenchman observed.

 

Thomas Hanke is Handelsblatt's correspondent in Paris. To contact the author: [email protected]