What are the implications for the global automotive supply chain from the world's largest automotive alliance? On April 22, Renault Chief Financial Officer Thierry Pitton revealed that Renault-Nissan is collaborating on Renault's structural reforms.
Ashewane Gupta, Nissan's chief operating officer and former Renault Group executive, will travel to Paris at the end of April to meet renault CEO De Mayo first. Executives from both companies will also hold a broader meeting in Tokyo in May.
In this issue of Palm Chain Network, First Logistics Network, "Learning Supply Chain from the Top 500", tells the past and present life of Renault-Nissan-Mitsubishi, the world's largest automobile alliance, as well as the cooperation strategy and supply chain collaboration model of the alliance's new ecosystem.
Renault CEO De Mayo Source: Renault official website
First, the ins and outs of the first major league
1. Hug the group successively!
In 1999, Renault acquired a 36.8% stake in Nissan, which increased to 44.4% at the end of the year, and appointed Carlos Ghosn as president of Nissan as executive vice president.
This move successfully saved the debt-laden Nissan from seven consecutive years of losses, and the renault-Nissan alliance was formed in October 2001. Nissan acquired a 15% stake in Renault in 2002, and the two parties are mutually owned.
"Hugging the group for warmth" is the most common way for enterprises to save themselves when they encounter certain difficulties. In 2016, Mitsubishi Motors also threw itself into the "embrace", and Nissan acquired a 34% controlling stake in Mitsubishi. In 2017, the Renault-Nissan-Mitsubishi Alliance was officially established, which is known as the world's first automobile alliance.
In terms of share holdings, Renault owns 44.4% of Nissan Motor's shares and voting rights on the board of directors, while Nissan Motors only holds 15% of Renault's shares and has no voting rights.
Is the triangle really stable? Renault and Nissan are behind the French government and the Japanese government, respectively, and this situation lays the groundwork for uncoordinated within the alliance.
2. The grand plan failed?
On the occasion of the official establishment, carlos Ghosn, chairman of the alliance, held a six-year planning meeting of the Renault-Nissan-Mitsubishi alliance to make a big move into the electric vehicle market.
Former Chairman of the Renault-Nissan-Mitsubishi Alliance (2017-2018) Ghosn Source: business today
Among them, Renault entered the low-end electric vehicle market, Nissan produced mainstream electric vehicles, and Mitsubishi provided hybrid technology and expanded to the two brands of Renault and Nissan. In 2017, it dominated the world's largest automaker with total sales of 10.61 million vehicles.
It seemed like it was going to be a big picture, but just at the end of 2018, Carlos Ghosn was arrested on charges of financial misconduct. The development and management of the alliance seem to be scattered, the performance of the alliance members has declined, the mutual trust has fallen off a cliff, and even Nissan is desperately trying to get rid of Renault's control.
3. Restore balance?
In 2019, the alliance appointed Jean Dominique Senal, president of Renault and vice president of Nissan, as its new chairman. He said the new business model will maximize each company's assets and execution capabilities to maximize the overall benefits.
Renault-Nissan-Mitsubishi Alliance New President Senal Source: Alliance official website
However, the political forces and interests behind this, coupled with the still crisis of the alliance letter, were scheduled to hold negotiations to rebalance the alliance in 2019, but were shelved due to more pressing operational and management issues.
In 2021, Renault and Nissan sold their shares to Daimler AG, the world's largest commercial vehicle manufacturer, the world's largest luxury car producer, and the second largest truck producer, forming a new alliance.
On January 27, 2022, Renault, Nissan and Mitsubishi Motors jointly released vision 2030, further alleviating alliance tensions.
Second, Nirvana is reborn, and the alliance is a new ecology
At present, there are two main ways of cooperation in the automotive industry: one is to form "merger and acquisition" cooperation through the control of equity; the other is short-term "project-type" cooperation, both aimed at holding each other together, working together, adjusting the automobile industry structure, and optimizing the automobile supply chain.
Speaking at the Vision 2030 launch, Senal, chairman of the Renault-Nissan-Mitsubishi Alliance, said that "for 22 years, we have been working for the common good based on our respective cultures and strengths."
Alliance Vision 2030 Press Conference Source: Alliance official website
During this period, although there was a quarrel between the brothers of the alliance, in the process of cooperation, it did revolutionize the structure of the global automobile industry.
In February 2020, at the Alliance's Operating Committee, all three companies reaffirmed the importance of the Alliance in strengthening their respective strategies and competitiveness, and a new framework agreement was reached, further strengthening their business cooperation models.
The emphasis on the "resource sharing" cooperation concept, the "leader-follower" cooperation model, and the "win-win" cooperation strategy have also further accelerated the pace of coordinated development of the automotive supply chain, and improved the efficiency, speed and performance of automotive engineering through alliance collaboration.
1. The largest logistics hub of the Alliance
The Dacia Industrial Park in Romania is one of the largest renault plants and can produce 13,000 new cars per day. Due to the impact of the Russo-Ukrainian War, the production was stopped in the early stage, and it is planned to fully resume the operation of the plant on May 4, 2022. The plant is also an important parts base for Renault and the two major brands proposed, and is the largest logistics hub of the Renault-Nissan-Mitsubishi Alliance.
2. The global distribution center of the alliance
The Renault-Nissan-Mitsubishi Alliance has built a global distribution center in Melbourne. Located between Melbourne's maritime container terminal and the airport with direct access to all interstates, the centre covers a 37,000 square metre warehouse that can store over 90,000 different parts and is the main warehouse for the Alliance's member distribution network.
3. Adjust the focus of the global sales market
Under the "leader-follower" strategy, Nissan plays a leading role in markets such as China, North America and Japan, while Renault focuses on markets such as Europe, Russia, South America and North Africa, and Mitsubishi focuses on markets such as Southeast Asia and Oceania.
Advantages of Alliance Members CoverEd Source: Alliance official website
4. Create an alliance production mode APW
On the one hand, the same "leader-follower" model is adopted, in which one of the companies will be responsible for taking the lead in developing key technologies in the alliance, then sharing them among the alliance partners and expanding to platforms, powertrains and key technologies to achieve complementary advantages of production technologies.
On the other hand, apw manufacturing is carried out using the alliance production method, that is, on the basis of NPW (Nissan production method), the core concept of SPR (Renault Production System) is integrated and improved, and the ideal production system is built in sync with customers.
Mitsubishi Motors Manufacturing Alliance Production Method APW Training Source: Renault official website
On April 3, 2022, two European Mitsubishi Motors were industrialized at the Renault Group plant, which also made the "leader-follower" cooperation model concrete. Takao Kato, president and CEO of Mitsubishi Motors, said that mitsubishi can strengthen its business in Europe by sharing the platform with Renault to create new synergies and enhance competitiveness.
4. Create the world's largest pure electric vehicle supply system
It is understood that the alliance's 15 factories in core markets such as Europe, Japan, the United States and China produce parts, motors and batteries for 10 pure electric models. As of early April 2022, the alliance has sold more than 1 million pure electric models, with a cumulative mileage of up to 30 billion kilometers.
The alliance's president, Jean-Dominique Senard, said at a press conference in January 2022 that "the alliance will be carbon neutral by 2050." ”
Unify procurement channels and reduce costs
At present, Renault and Nissan work closely together in production and parts procurement, but they all purchase batteries through different channels, and the procurement cost is relatively large.
Therefore, the launch of five cross-brand shared pure electric vehicle models platform at the alliance's 2030 vision conference, and the selection of a common battery supplier is the key to allowing member companies to develop a common alliance battery strategy, thereby saving more costs.
Large-scale mass production to accelerate the transformation of electrification
The alliance is committed to achieving mass production of all-solid-state batteries (ASSBs) by mid-2028 and reducing battery costs to $65 per kWh to achieve cost parity for all-electric models and fuel models, thereby accelerating the global electrification transition.
The CMF-B EV platform can reduce production costs by 33% and energy consumption by more than 10% compared with the existing Renault ZOE, enabling battery scale and thus reducing supply chain management costs between alliances.
Renault CEO De Mayo said, "If a collaborative approach can be found in the battery field, the alliance will be the first to use the same battery module battery, which can produce 1.5 million units per year as early as 2026." ”
Advanced management system accurate prediction, reduce the bullwhip effect
The alliance has an advanced battery management system. Unlike other companies, the alliance has 100% control over its hardware and software, and companies can obtain valuable predictive data while monitoring battery health in real time, keeping the bullwhip effect of supply chain imbalance firmly in the cage.
Money is pouring into the electrification market
Prior to the release of Vision 2030, the Alliance had invested more than €10 billion in electrification. Over the next five years, the alliance will invest 23 billion euros in electrification to accelerate development.
Link into the cloud, data interaction visualization
3 million vehicles have been connected to the alliance cloud through data interaction. By 2026, more than 5 million Alliance cloud systems will be delivered each year, and 25 million vehicles will be connected to Alliance Cloud systems, making it the first manufacturer in the world to introduce the Google ecosystem into production models.
With the alliance eyeing the revolutionary wave of digitalization and electrification and adjusting new strategic steps for future development, can the members of the alliance return to the position of the world's largest automaker with a single blow?
Resources:
1. "Promoting the "Alliance Vision 2030" and Going to a New Future together" Renault-Nissan-Mitsubishi Alliance official website
(Author: Larry)
Typography: Xiaolan