RNM without Ghosn

Augusto Amorim, Senior Manager, Americas Vehicle Sales Forecasts

29 November 2018

The future of the RNM alliance

RNM Alliance safe without Ghosn, asserts chairman of Nissan North America

Denis Le Vot, Chairman of Nissan North America, has no doubt: Nissan, Renault and Mitsubishi are committed to remaining in the alliance created by Carlos Ghosn, who, until his recent fall from grace, was one of the most powerful figures in the global automotive industry. Former CEO of Renault and Chairman of the alliance’s three brands, Ghosn now languishes in a Japanese prison, accused of underreporting his income and personal use of company assets to the Tokyo Stock Exchange.

“The future of the three companies is the alliance”

As Le Vot was speaking to a select group of automotive analysts – including yours truly – on the sidelines of the Los Angeles Auto Show yesterday, the Renault-Nissan-Mitsubishi Alliance board was meeting at its headquarters in Amsterdam, no doubt to thrash out Ghosn’s fate and the company’s own future without him. “There is a long-term commitment to zero emissions and zero fatalities, which includes AVs and EVs”, Le Vot stated, referring to autonomous and electric vehicles. “The future of the three companies is the alliance”.

Renault and Nissan joined forces in 1999, gleaning praise for preserving the individual identities and cultural differences of both brands. Renault has a 43.4% stake in Nissan, while Nissan owns 15% of Renault. Mitsubishi was incorporated into the group in 2016, with Nissan acquiring 34% of the Japanese marque, thus ushering in the era of the Renault-Nissan-Mitsubishi Alliance (RNM).

Our data point to RNM as the world’s second-largest sales group in 2017, with sales to the tune of 10.3 million, trailing VW Group by around 130,000 units. North America alone represented more than 22% of last year’s sales – despite the fact that the Renault brand is not sold in the US or Canada – which underscores why Le Vot’s leadership of Nissan is so critical to the alliance’s future. While we anticipate a 6% decline in sales for RNM this year compared to 2017, Le Vot justifies this by saying that “Dealers were piling up inventory. In the first half of this year, our wholesales were 94,000 units lower than in the same period of last year”. He also points out that, in December 2017, only 14% of Nissan’s total volume was generated by model-year 2018 vehicles, versus an average of 55% for the overall industry. This year, model-year 2019 sales have already exceeded the 50% mark.

Nissan has just unveiled facelifts of the Murano Midsize SUV and Maxima Large Car in LA this week. Le Vot also promises a dedicated electric SUV for 2021, by which time 70% of the brand’s line-up should be new. Over the next twelve months, every Nissan sedan will be renewed, starting with the Midsize Altima this year.

“We anticipate another first for the brand in 2021, when SUVs are set to outsell Cars”

As is true for other Japanese brands, Nissan plans to stick with the Car bodystyle, in contrast to domestic automakers, many of which are abandoning this segment of the US market. As Le Vot explains, “Nissan’s footprint is global and we can spread the costs of developing a Car. Besides that, the Car market is still big in the US with 5 million units, and our research shows that younger buyers are interested in Cars because their parents are driving SUVs, but Cars need to have tech features”.

Nissan’s Car sales in North America are forecast to fall short of 800,000 units this year, which would be the first time that the brand fails to hit this threshold since 2012. We anticipate another first for the brand in 2021, when SUVs are set to outsell Cars, and project a 2 percentage point gain in market share for its Car segment (from 13% in 2018 to 15% in 2021), in contrast to a flat share of 8% in the SUV market.