Renault-Nissan Alliance: Will Further Integration Create More Synergies?1

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RENAULT-NISSAN ALLIANCE: WILL FURTHER INTEGRATION CREATE MORE SYNERGIES?1

Wiboon Kittilaksanawong and Caroline Palecki wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality.

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Renault-Nissan Alliance (RNA) was the oldest of its kind in the automotive industry, celebrating its 15th anniversary in March 2014. As of April 2015, it sold more than one in 10 cars worldwide.2 The alliance was formed on the principles of mutual respect while preserving each other’s brands and corporate identities. On April 1, 2014, to accelerate synergies, RNA launched convergence projects in four key functions: research and development, manufacturing and logistics, purchasing, and human resources, expecting to realize at least €4.3 billion3 in annualized synergies and cost reductions by 2016, an increase of 54 per cent since 2013.4 However, the projects presented a number of important questions: Would this strategic move to enhance economies of scale through greater levels of product and process standardization limit quality and innovation? Would its benefits outweigh the costs of organizing common processes between the two culturally distant, independent entities? Would the move allow RNA to successfully compete in both developed and emerging target markets? Would further integration jeopardize the alliance’s original spirit of respecting each other’s distinctive identities, and thus undermine its competitiveness and sustainability in the long run? Should the alliance consider inviting new partners to strengthen its standing?

THE GLOBAL AUTOMOTIVE INDUSTRY

The automotive industry had become increasingly consolidated to meet the challenges of a wider product line, global presence and economies of scale. While in traditional developed markets like the United States and Western Europe, the industry had slowed down, emerging markets — particularly those in Brazil, Russia, India and China (BRIC) — had been growing, representing over 50 per cent of global light-vehicle sales. 5 The developed markets had seen expansion in substitute means such as public transportation, car sharing and used cars. Consumers were more cost conscious and less loyal to brands while lengthening the use of their cars. Automakers had to deal with new and more stringent regulations concerning safety and carbon dioxide emissions. Accordingly, manufacturers had to find a way to invest in new technologies while ensuring competitive prices. In emerging markets, the main challenge was to adapt existing models and technologies to the local markets, and localize production and distribution capacities to achieve lower prices. However, the common key success factors in both markets for the manufacturers were time to market, cost, quality and styling.6

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The industry had a few large parts and components suppliers serving major automakers. There were also a number of small, highly specialized suppliers — mostly original equipment manufacturers (OEM) — who relied on relationships with a few automakers. These suppliers had increasingly been challenged by automakers to provide more added values but generally for the same price.7 For example, suppliers were required to invest in highly specific assets or technologies dedicated to particular needs of their clients, and to ensure high production capacities at a global scale without reciprocal commitments.

The Role of Purchasing Function

Automakers outsourced over half of the required parts and components.8 Purchasing represented up to 70 per cent of the total cost of final vehicles. 9 The success of Toyota as the world’s first automobile manufacturer to produce more than 10 million vehicles per year was often explained by relationship- specific investments with its suppliers.10 Since the 1980s, automobile manufacturers had adopted “just-in- time” (JIT) production techniques, reducing the number of suppliers and investing in long-lasting collaborative relationships with only a few of them to ensure quality and product development time.

Japanese automakers were mostly familiar with developing long-term and strong informal relationships with suppliers under the “keiretsu.” The keiretsu was a type of informal business group comprising companies with interlocking business relationships and shareholdings.11 While large automakers in the West had shifted to arm’s-length relationships with parts suppliers, Toyota invested significantly in its suppliers’ capability development. These suppliers were, in turn, able to provide sophisticated system components tailored to Toyota’s specific requirements at highly competitive prices.12 The relationship between RNA and its suppliers was in between such arm’s-length and highly relationship-specific transactions. In particular, the alliance developed strong partnerships with suppliers of key components, while it employed arm’s-length transactions with those supplying standardized, peripheral components.

THE RENAULT-NISSAN ALLIANCE

RNA was a strategic partnership between two automobile manufacturers: Renault, based in Paris, France, and Nissan, based in Yokohama, Japan. The alliance was officially established on March 27, 1999, with Renault acquiring 36.8 per cent of Nissan’s outstanding stocks.13 Carlos Ghosn had been appointed the chief executive officer of both companies. A key principle of the alliance’s formation was that the parties respect each other’s independent corporate identity. During the late 1990s and early 2000s, the automotive industry had undergone a period of consolidation, with numerous merger and acquisition deals.14 RNA’s top priority was to revive Nissan from the verge of bankruptcy. The revival plan drastically cut operating costs while implementing a clear strategic direction. In 2001, after the turnaround, Nissan bought a 15 per cent stake in Renault, while Renault increased its stake in Nissan to 43.4 per cent15 (see Exhibit 1).

The main objective of RNA was to create synergies in each stage of the value chain, by fostering cost reduction and quality/innovation improvement (see Exhibit 2). The alliance allowed the parties to share technologies and best practices, and to enter new markets. Renault could benefit from Nissan’s strong position in North America and Asia, while Nissan could learn from Renault’s successful experience in Europe, Latin America and Russia (see Exhibit 3). The alliance aimed to be one of the top three automakers in terms of quality, technology and profitability, while upholding the imperative principle of respecting each other’s brand image, culture and organizational processes. Both sides realized that the cooperation had to be based on trust and that strategic decisions had to be mutually beneficial.

Further Integration Strategies

Since its formation, RNA had developed through more integration between the two partners. RNA first established the Renault-Nissan Purchasing Organization (RNPO) in 2001 to maximize economies of scale. To better align strategies and realize more synergies, in 2002, the alliance created the Renault- Nissan BV (RNBV), a strategic management company with the stocks being held equally between the partners (see Exhibit 1). RNBV was an impartial platform for Renault and Nissan to exchange ideas, build strategy and leverage each other’s competences and resources in a way that maximized their synergies.16

By 2009, RNBV had set up a dedicated team of alliance directors to accelerate the integration and sharing of best practices to create even more synergies. Such development allowed RNA’s partners to open their first joint manufacturing plant and technical centre in Chennai, India in 2010.17 The plant would begin the production of vehicles within the common module family — affordable (CMF-A), to be launched into the Indian market in 2015. CMF-A would cover the most affordable category of cars through the modular system of vehicle architecture. For maximum efficiency and brand differentiation, compatible parts and components within the modular system would be assembled into hundreds of possible configurations.

A significant step towards the integration was made on April 1, 2014, when the alliance began the four convergence projects.18 Both companies jointly managed key project functions by appointing an alliance executive to lead each function, and a management committee to oversee the implementation.

The alliance clearly benefited both partners in terms of market shares, global presence, technology development and cost reduction. By 2013, RNA had sold nearly 8.3 million units, becoming the fourth- largest global automaker in the world19 (see Exhibit 4). The alliance had met its global expansion target of achieving 10 per cent market share in the top five countries: Russia, France, Mexico, Turkey and Japan. However, RNA needed to strengthen its presence in China, Germany, the United States, the United Kingdom and Brazil. Through the alliance, both companies were able to share expertise and costs in developing new technologies that met future needs and trends of automobile markets. In particular, RNA was the world’s leading plug-in electric vehicle manufacturer. It had a leading 58 per cent market share for zero-emissions cars with global sales of over 200,000 units in 2014.20

Inviting New Partners

In parallel with these developments, RNA invited new partners to access new markets and technologies. In 2008, Renault and Nissan acquired 25 per cent and 17 per cent shares, respectively, in AvtoVAZ, the largest car manufacturer in Russia and an owner of the country’s most sold brand, Lada.21 The acquisition enabled RNA to enter the Russian automotive market. RNA also launched the AvtoVAZ-Renault-Nissan Purchasing Organization (ARNPO) in January 2015 to localize the procurement of parts while encouraging global suppliers to expand their operations in Russia.22 The expected benefits for both RNA and AvtoVAZ were technology upgrading, as well as quality improvement and cost reduction.

In 2010, RNA decided to partner with Daimler, a German luxury car manufacturer, by buying 3.1 per cent shares of the company to develop technologies that increased their mutual efficiency worldwide23 (see Exhibit 1). In 2013, RNA and Daimler together partnered with a major industry player, Ford, to jointly develop a fuel-cell electric vehicle technology. 24 In the same year, Renault accelerated its global expansion through a 50-50 joint venture with a Chinese state-owned enterprise, Dongfeng to build a plant in Wuhan, which was expected to launch the first locally manufactured vehicle in 2016.25 Because Dongfeng and Nissan had collaborated in China before for over 10 years, the Renault-Dongfeng joint venture would leverage their synergies in terms of plant construction and operations. In 2014, Nissan and

Mitsubishi set up an equal-stake joint venture to pursue development of a mini car-based electric vehicle at the lowest price among major automakers, expecting to release a new model in 2016.26 This joint venture also allowed Nissan and Mitsubishi to share technology and development costs.

Some of the challenges of partnering strategy included finding appropriate partners that would agree on the alliance’s principles and implementing the effective collaboration. RNA experienced such difficulties in 2009, when it decided to create a low-cost mini car in India in partnership with local player Bajaj, which had expertise of developing low-cost products and knowledge of the Indian market. However, the parties could not reach agreements, particularly on the quality and safety of the mini car.27 RNA then discontinued platform-sharing plans in India.

BROADENING RNA’S SCOPE OF PURCHASING AND SHARING BEST PRACTICES

Common Purchasing Activities

RNPO was the largest common organization between Renault and Nissan that significantly contributed to the creation of new synergies, covering all purchasing activities of Renault and Nissan worldwide. Since 2009, RNPO had managed 100 per cent of the partners’ purchasing activities (compared to only 30 per cent when it was created in 2001).28 As a result, the alliance had largely increased its bargaining power toward suppliers and thus effectively decreased direct and indirect costs of manufacturing inputs. Since the creation of RNPO, the most significant change for Nissan was that Ghosn had disbanded its traditional keiretsu, which was seen as costly, slow and inefficient.29

Before RNA’s formation, Nissan and its suppliers under the keiretsu were linked through obligational and financial relationships. The suppliers were considered as a part of the Nissan group, while Nissan held some equity stakes in its suppliers. However, such relationships, based on trust and goodwill, did not prove to be efficient. The price of parts and components offered by these suppliers was usually higher than the global competitive price. As the automotive industry entered a period of consolidation, the keiretsu significantly weakened Nissan’s competitive position in the industry. Renault, on the contrary, was among the most competitive automakers at the time in employing worldwide component outsourcing, particularly with the increasing number of electronic parts.30 Through sharing of best practices, Nissan was highly encouraged to adopt Renault’s supplier selection processes, in which the successful suppliers were likely to be those offering the best quality and delivery at the most competitive price.

Nissan was also encouraged to outsource many parts and components that were once manufactured in house or jointly produced with its suppliers. At the time, Renault helped Nissan to select the best suppliers, including those from Renault’s portfolio. The combination of the partners’ supplier pools strengthened the alliance’s bargaining power with suppliers, which in turn enhanced efficiency and cost reduction. Since its creation, RNPO had become a major driver of synergy creation within the alliance. In 2013, through integrated purchasing processes, RNPO created €1.036 billion of synergies, accounting for about 37 per cent of total synergies generated by the alliance.31 This success was based on the alliance’s ability to achieve equal and equitable allocation of benefits between partners. While Renault shared its best practices in supplier selection processes and helped Nissan decrease its purchasing costs, Nissan contributed to improvements in the quality of Renault’s manufacturing processes.

Following such successful experience, in India, the alliance built its largest common plant where the partners jointly sourced components to foster efficiency and cost reductions while decreasing the complexity of the purchasing processes. 32 In Russia, Renault, Nissan and AvtoVAZ merged their purchasing activities in January 2015. 33 The new AvtoVAZ-Renault-Nissan Purchasing Organization

(ARNPO) managed the purchasing activities of all three partners in Russia under the standards of the original RNPO. With the combined purchasing volume of three partners, ARNPO was set to become the largest buyer in Russia, facilitating AvtoVAZ’s further integration into the global automotive industry.

Standardization via Shared Platforms and the Common Module Family

In 2013, the alliance launched the common module family (CMF), a modular architecture consisting of five common interchangeable modules, including engine bay, cockpit, front underbody and rear underbody, as well as electrical and electronic parts.34 The CMF allowed engineers to mix and match a variety of common components in order to further facilitate the joint purchasing of parts. The objective was to produce 70 per cent of cars under the CMF by 2018. The CMF enabled the alliance to maximize the economies of scale in terms of number of vehicles and geographical regions coverage. This project was anticipated to generate at least 30 to 40 per cent of overall cost reduction per model. The innovative CMF allowed the alliance to significantly reduce purchasing costs, while ensuring each partner’s distinct brand image and a diversity of products to better serve different markets.

Increased Cooperation Between Renault-Nissan Alliance and Other Partners

Inspired by Nissan, RNA enhanced the practice of “monozukuri” in the development process of new cars. Monozukuri (meaning “making things” in Japanese) was embedded in Nissan’s tightly integrated value chain, from design and manufacturing to delivery, so as to provide high quality products at a lower cost.35 The critical functions to be integrated were purchasing, manufacturing, logistics and delivery. Thanks to the creation of cross-functional teams, the purchasing teams not only followed the decisions made by the engineers, but also took an active role in making such decisions. Through the meetings in the early stages of product development, the purchasing teams were able to effectively influence the use of the cheapest and most common parts that would generate the highest cost savings to the alliance. The application of the monozukuri philosophy was expected to reduce direct costs by 4 per cent each year.36

Apart from improving existing technologies, Renault and Nissan also shared the costs of developing new technologies (e.g., electric cars and batteries). Both companies shared their research findings with their respective battery suppliers (LG Chem for Renault37 and NEC for Nissan).38 As a result, the alliance could produce quality electric cars at attractive prices. The Nissan Leaf, released in December 2010, was the world’s first mass-produced zero-emissions vehicle. It became the best-selling electric car, with over 100,000 units sold in 2014, accounting for over 45 per cent of worldwide market share.39

The alliance also enhanced its adaptation experience through cooperation with local partners in new locations. In particular, Renault and Nissan learned to create “frugal innovations”40 through cooperation on CMF-A in India, with the objective of launching ultra-low-cost cars in emerging markets. 41 By collaborating with Indian engineers, RNA was able to adapt its offers to the local market with fewer parts and materials, and less product development time. The use of a local supply base was critical in the alliance’s strategy to reduce manufacturing costs in India. With the help of a local supplier, RNA even developed a scrap-recycling system to produce new parts from used materials.

CO-CREATION BETWEEN THE ALLIANCE AND ITS SUPPLIERS

When Ghosn launched the revival plan in October 1999, one of the very first measures was to dismantle the keiretsu in Nissan’s purchasing system. The alliance’ parts and components procurement had since

moved toward arm’s-length relationships. However, in 2004, RNA had reintegrated some elements of the relationship-specific transactions in dealing with suppliers in its new purchasing policy.42 The purchasing practices had since underlined the potential benefits of investing in the relationship with suppliers.

First, RNA established the continuous review of supplier performance, and shared review results with its suppliers. Each year, the best suppliers were publicly rewarded. This policy encouraged suppliers to continuously deliver quality and price-competitive parts. The suppliers were also given more confidence that they would benefit from investing in such relationship. Furthermore, the alliance judged the suppliers’ performance according to their ability to make proposals and implement continuous improvement in terms of quality, cost and delivery.43

In exchange, RNA invested in its suppliers by collaborating with them to improve and optimize their products and manufacturing processes. The alliance created multi-functional teams to work with its suppliers to develop new parts and components or to improve existing ones. Such assistance included direct involvement in technical improvements or developments at the suppliers’ production sites. To encourage supplier innovation, RNA built long-term relationships with its suppliers by developing common working teams with the alliance’s specialists from the earliest phases of development.44

RNA used several incentives to successfully convince its suppliers to invest in such specific relationships. Suppliers could improve their own competitiveness by accessing RNA’s valuable knowledge and expertise, increasing supply volumes to RNA’s partners, and by following RNA in its international expansion. Importantly, suppliers also gained higher market recognition and spillover reputation.45

The co-creation benefited RNA as well, by delivering price-competitive components with better quality, shorter development time and tailor-made unique technologies. Through the strong partnership with its suppliers, RNA could focus more on its core competencies and invest in strategic projects with high growth potential, such as electric cars and mini cars for emerging markets. These partnerships were also crucial in some emerging markets, where skilled and flexible suppliers were lacking; e.g., by investing in the relationship with AvtoVAZ, RNA was able to secure enough quality parts in Russia.46

CHALLENGES WITH INTEGRATION

Cost Reduction versus Quality and Innovation

While industry experts and the media initially doubted RNA’s chances of success, the alliance had proven to be very successful. In 1999, Nissan reported a net income loss of ¥684 billion;47 however, by 2014, it enjoyed a net income gain of ¥458 billion. Nissan’s 2014 operating profit margin (5.2 per cent — two points above the industry average) was one of the best in the industry.48 Similarly, Renault expanded into new countries, and realized cost reductions, technology developments and quality improvements. Its net income grew by 274 per cent between 1999 and 2014. The stock prices of both companies had risen: Nissan’s by 50 per cent, while Renault’s had more than doubled.49

However, both partners had to accept some trade-offs in exchange for benefits. Some of Nissan’s engineers deplored what they saw as an excessive focus on cost reduction against quality and innovation, and were reluctant to use Renault’s suppliers.50 While price was a major concern when consumers bought a new car, it was not the only criteria. Developed country consumers considered quality, safety, reputation and performance to be the four most important criteria when buying a car.51 Increasing the number of common parts within RNA’s different car models would also increase the probability of a defective component affecting more vehicles. This risk had been demonstrated in 2013, when Nissan had to recall

one million cars in North America for airbag problems. The recall affected seven models, including some of the best sellers in the region. Also in 2013, about 841,000 vehicles worldwide were recalled due to a steering wheel glitch.52 Higher standardization of parts in large production volumes increased risks not only in terms of financial performance, but also with respect to reputation and brand image.

A higher level of product standardization (e.g., predefined platforms and modules) could also compromise RNA’s focus on innovation. The reluctance of Nissan’s engineers to use Renault’s suppliers implied that emphasizing costs might deteriorate creativity and innovation within RNA. 53 Engineers might be restricted to develop incremental innovations from traditional designs or existing models. Such drawbacks might hinder expansion in emerging markets where local adaptation was critical. For example, Renault decided to enter India with the Logan, an existing low-cost model within its portfolio. Due to this decision, Renault lacked localization of its suppliers. The company procured only 50 per cent of the necessary parts in India, which was a much lower rate than that of its competitors. The car’s engine, one of the most expensive parts, was also imported from France.54 The price of the Logan was thus not low enough to attract Indian consumers and to compete in the Indian automotive market.

As a long-term sustainable strategy, RNA was supposed to invest in several potential innovative projects. Instead, it focused only on plug-in electric cars. Management underestimated the opportunity of hybrid cars, which were growing in developed markets.55 As a result, Toyota had successfully claimed its global leader position with the Prius model.56 Arguably, RNA was overly optimistic about the potential of plug- in electric cars. In 2013, Ghosn acknowledged that sales of its electric cars were at least four years behind the target, which he blamed on slow infrastructure development.57 In fact, RNA’s management did not sufficiently study the suppliers of electricity and supporting infrastructure before investing in this project.

The revival of the Nissan Datsun in India to compete with the Tata Nano was another failure. The Global New Car Assessment Programme, an international car safety organization, awarded the car zero stars and recommended its withdrawal while Nissan argued that it met all local safety regulations.58 Renault was also too late in entering the growing Chinese market. It entered China in 2013, when all other major competitors were already present. As a late mover in China, Renault hardly established strategic collaboration with local partners and suppliers to compete with the incumbent competitors.

Integration versus Flexibility

Renault and Nissan had very different corporate cultures. Both required considerable time to reach common strategic decisions and implement them. Such compromise in the alliance’s flexibility was further lessened when more partners were involved and integration among partners was emphasized. It would be increasingly difficult for partners in the alliance to maintain their status quo. For example, RNA would need much more time to reach common agreements not only within the alliance (e.g., cross- functional teams from Renault, Nissan, Daimler, AvtoVAZ, Dongfeng and Mitsubishi), but also with outside partners (e.g., suppliers and other auto manufacturers). Time to market, a key success factor in the automotive industry, would undoubtedly worsen. The alliance’s prerogative to ensure that all of its decisions were based on a win-win principle might be hard to achieve.

As the two companies increased their integration and convergence of organizational processes in order to realize more economies of scale, to what extent should they abandon their own corporate cultures and identities to strengthen the integration? In 2008, Nissan refused to use the Logan platform for the development of its low-cost car segment and decided to create its new platform, breaking the alliance strategy to increase the use of common modules.59 Was the future strategy of RNA — i.e., relying on

standardization and increasing common organizational processes — threatening the basic principle of its creation: mutual respect of each partner’s identity?

THE LEADERSHIP OF CEO AND SUCCESSION PLAN

RNA’s success was largely based on Ghosn’s leadership. He had given both companies the autonomy to act within certain boundaries and retain their own individuality, while joining to build mutual benefits. As RNA pushed to achieve even more integration and thus efficiencies, Ghosn used some coercion to persuade the management of both companies to share designs as well as parts and components. The downside of pushing integration was that it was hard to keep the companies separate and on equal footing.

The 61-year-old Ghosn was hoping that electric cars, autonomous vehicles and costs reductions would drive the alliance to a place among the world’s top three automakers. Given his track record, even if he succeeded in this endeavour, could anyone successfully take his place? Most of the industry’s top-line executives were over 50 years old. Neither Nissan nor Renault had a clear candidate lined up to run such a complex alliance. RNA ran at least three auto companies (e.g., Renault, Nissan, AvtoVAZ and a few others), with three different official languages. Its leader was responsible for 10 per cent of all worldwide cars sales, amounting to €115 billion in 2014.60 RNA also owned 3.1 per cent of Daimler, which in turn owned 3.1 per cent each of both Nissan and Renault. Could anyone succeed Ghosn in managing such a vast and complex enterprise?

NEXT STRATEGIC MOVES OF THE ALLIANCE

Ghosn was considering integrating a third global car manufacturer into RNA to further increase synergies and raise the investment needed to adapt to new regulations, trends and needs in both developed and emerging markets.61 RNA had engaged in talks with General Motors but its attempt to partner with this U.S. manufacturer failed in 2006.62 Given the long-term successful collaboration between Renault and Nissan, would its alliance knowledge and experience help it to identify the right partner(s) and to manage the new alliance portfolio effectively? Would inviting new partners dilute RNA’s core values and identities, and increase the complexity (and costs) of the organization?

As new synergies would require further integration, should the two partners merge? Both companies had denied the merge option since the alliance’s formation. However, in light of increasing dependence and integration, merging seemed to be a possible option. Alternatively, the two companies could split up into two smaller entities, struggling to survive in the highly consolidated automotive industry.

At Renault’s annual meeting in April 2014, Ghosn set a goal for RNA to become one of the top three global automakers. To achieve this goal, the company had less than three years to increase its market share and profits by 33 per cent in order to achieve 8 per cent global market share and 8 per cent operating margins by the end of fiscal year 2017/18. A large part of this ambition was to conquer the BRIC markets. However, Brazil and China’s economies were starting to slow down, and the Russian economy tended to head for recession. Furthermore, the Nissan Leaf had not come close to paying off the €5 billion that had been invested in it. Ghosn had to admit that RNA still had a long way to go.

EXHIBIT 1: RENAULT-NISSAN ORGANIZATION

Source: Renault Nissan, “Alliance Facts and Figures 2014,” 2014, www.nissan- global.com/EN/DOCUMENT/PDF/ALLIANCE/HANDBOOK/2014/BookletAlliance2014_GB.pdf, accessed August 20, 2015.

EXHIBIT 2: EVOLUTION OF ALLIANCE SYNERGIES

Nissan Revival 1999~2003 Exchange Best Practices and Exploit Synergies 2003~2008 Hard Synergies 2008~2012 Support Midterm Plans and Growth 2013~

Source: Renault Nissan, “Alliance Facts and Figures 2014,” 2014, www.nissan- global.com/EN/DOCUMENT/PDF/ALLIANCE/HANDBOOK/2014/BookletAlliance2014_GB.pdf, accessed August 20, 2015.

EXHIBIT 3: FINANCIAL AND SALES FIGURES

Nissan financials, 1999 – 2014 Year 1999 2005 2013 2014 1999 – 2014 Net income (million ¥) -684,363 518,000 389,000 457,600 +167% Operating profit margin 1.4% 9.2% 4.8% 5.2% +3.8 points

Renault financials, 1999 – 2014 Year 1999 2013 2014 1999 - 2014 Net income (million €) 534 695 1,998 +274% Operating profit margin 5% 1.3% 2.2% -2.8 pts

Nissan global sales, 1999 – 2014 (units) Year 1999 2005 2013 2014 1999 – 2014 Japan 758,603 842,062 678,824 623,000 -18% USA 874,160 1,075,097 1,248,421 1,400,000 +60% Europe 500,836 540,945 651,476 755,000 +51% Others 281,834 1,111,191 993,628 1,318,000 +368% China N/A N/A 1,266,167 1,222,000 N/A Mexico N/A N/A 264,463 N/A N/A TOTAL 2,415,433 3,569,295 5,102,979 5,318,000 +117%

Renault global sales, 2013 – 2014 (units) Year 2013 2014 Europe 1,301,864 887,010 France 547,693 577,601 Russia 210,099 194,531 Brazil 236,360 237,187 India 64,368 44,849 Others 267,824 771,254 TOTAL 2,628,208 2,712,432

Source: Nissan, “Nissan Motor Corporation Annual Report 2015,” 2015, www.nissan- global.com/EN/DOCUMENT/PDF/AR/2015/AR15_E_All.pdf, accessed August 20, 2015; Renault, “Renault Annual Report 2014,” 2014, http://rapport-annuel.group.renault.com/en/assets/pdf/renault_ra_2014_en.pdf, accessed August 20, 2015.

EXHIBIT 4: RENAULT-NISSAN-AvtoVAZ SALES IN 2013

2013 Sales Results (in million units) Toyota 9.8 GM-Wuling 9.7 VAG-Porsche 9.5 Renault-Nissan 8.3 Hyundai-KIA 7.4 Ford 6.3 Fiat-Chrysler 4.4 Honda 4.3 PSA 2.8 Suzuki 2.7 BMW 2.0 Daimler 1.8 Mazda 1.3 Mitsubishi 1.0

Source: Renault, “Renault Nissan Alliance Facts and Figures 2014,” 2014, www.nissan- global.com/EN/DOCUMENT/PDF/ALLIANCE/HANDBOOK/2014/BookletAlliance2014_GB.pdf, accessed August 20, 2015.

ENDNOTES

1 This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives presented in this case are not necessarily those of Renault-Nissan Alliance or any of its employees. 2 “The Renault-Nissan Alliance Reports Record Sales of 7,276,398 Units in 2010,” January 28, 2011, www.nissan- global.com/EN/NEWS/2011/_STORY/110128-02-e.html, accessed August 20, 2015. 3 € = EUR. 4 “Renault Nissan Alliance Facts and Figures 2014,” www.nissan- global.com/EN/DOCUMENT/PDF/ALLIANCE/HANDBOOK/2014/BookletAlliance2014_GB.pdf, accessed August 20, 2015. 5 “McKinsey Report — The Automotive Industry: 2020 and Beyond.” 6 J. H. Dyer, Collaborative Advantage: Winning Through Extended Enterprise Supplier Networks, Oxford University Press, Oxford, 2000. 7 “Global Automotive Supplier Study,” September 9, 2013, www.rolandberger.com/press_releases/Global_automotive_supplier_study.html, accessed August 20, 2015. 8 F. Lettice, C. Wyatt and S. Evans, “Buyer-supplier Partnerships During Product Design and Development in the Global Automotive Sector: Who Invests, in What and When?” International Journal of Production Economics, 127(2), 2010, pp. 309- 319. 9 Dyer, op. cit. 10 R. Vaghefi, “Creating Sustainable Competitive Advantage: The Toyota Philosophy and Its Effects,” FT.com, 2001. 11 K. Aoki and T.T. Lennerfors, “The New, Improved Keiretsu,” Harvard Business Review, 91(9), 2013, pp. 109-113. 12 Ibid. 13 Renault-Nissan Alliance, Facts and Figures, 2014. 14 J. MacDuffie and C. Benko, “Auto Industry Consolidation: Is There a New Model on the Horizon?” January 25, 2006, http://knowledge.wharton.upenn.edu/article/auto-industry-consolidation-is-there-a-new-model-on-the-horizon/, accessed August 20, 2015. 15 “Nissan and Renault Cement Ties,” October 30, 2001, http://news.bbc.co.uk/2/hi/business/1627671.stm, accessed August 20, 2015. 16 “The Alliance,” op. cit. 17 “Renault-Nissan Confirms New Vehicles Specifically Tailored for Growth Markets,” July 16, 2013, http://blog.alliance- renault-nissan.com/content/renault-nissan-confirms-new-vehicles-specifically-tailored-growth-markets, accessed August 20, 2015. 18 “The Alliance,” op. cit. 19 “Renault-Nissan: Can Anyone Succeed Carlos Ghosn?” December 29, 2014, http://fortune.com/2014/12/29/renault- nissan-carlos-ghosn, accessed August 20, 2015. 20 “Renault-Nissan Sells Its 200,000th Electric Vehicle,” November 26, 2014, www.nissan-global.com/EN/NEWS/2014/_ STORY/141126-02-e.html, accessed August 20, 2015. 21 “Renault-Nissan and Russian Technologies Create Joint Venture to Finalize Strategic Partnership with AvtoVAZ,” December 12, 2012, www.media.blog.alliance-renault-nissan.com/news/renault-nissan-and-russian-technologies-create- joint-venture-to-finalize-strategic-partnership-with-avtovaz/, accessed August 20, 2015. 22 “Renault-Nissan Alliance and AVTOVAZ to Create New, Merged Purchasing Organization in Russia,” December 15, 2014, http://blog.alliance-renault-nissan.com/content/renault-nissan-alliance-avtovaz-create-new-merged-purchasing-organization- russia, accessed August 20, 2015. 23 “Renault-Nissan Alliance and Daimler AG Announce Wide-ranging Strategic Cooperation,” April 7, 2010, www.daimler.com/dccom/0-5-7171-1-1286487-1-0-0-0-0-1-8-7164-0-0-0-0-0-0-0.html, accessed August 20, 2015. 24 “Daimler,” January 28, 2013, www.daimler.com/dccom/0-5-7171-1-1569731-1-0-0-0-0-0-12037-0-0-0-0-0-0-0-0.html, accessed August 20, 2015. 25 “Renault-Dongfeng One Year Later,” December 16, 2014, http://blog.alliance-renault-nissan.com/blog/renault-dongfeng- one-year-later-0, accessed August 20, 2015. 26 “Nissan, Mitsubishi to Join Hands on Low-cost Electric Car,” August 4, 2014, http://asia.nikkei.com/Business/Deals/ Nissan-Mitsubishi-to-join-hands-on-low-cost-electric-car, accessed August 20, 2015. 27 “Renault Not to Partner Bajaj; Holds Plans of Low-cost Cars,” March 28, 2014, www.moneycontrol.com/news/ business/renault-not-to-partner-bajaj-holds-planslow-cost-cars_1060049.html, accessed August 20, 2015. 28 “Renault-Nissan Alliance Recognizes Its 10-year Anniversary and Takes a New Step Forward,” www.nissan- global.com/EN/DOCUMENT/PDF/AR/2009/AR09E_P14_Renault-Nissan_Aliance.pdf, accessed August 20, 2015. 29 “The Renault-Nissan Alliance in 2008: Exploiting the Potential of a Novel Organizational Form,” HBR. 30 G. Douin, “Behind the Scenes of the Renault-Nissan Alliance,” translated by Rachel Marlin, École de Paris du Management, Paris, 2002. 31 “Renault-Nissan Alliance Posts Record €2.9b Synergies in 2013 ahead of Launch of First Common Module Family Vehicles,” July 2, 2014, www.media.blog.alliance-renault-nissan.com/news/renault-nissan-alliance-posts-record-e2-9b- synergies-in-2013-ahead-of-launch-of-first-common-module-family-vehicles/, accessed August 20, 2015. 32 “The Renault-Nissan Alliance Inaugurates Plant in Chennai, India,” March 17, 2010, www.nissan- global.com/EN/NEWS/2010/_STORY/100317-01-e.html, accessed August 20, 2015. 33 “Renault-Nissan Alliance and AVTOVAZ to Create New, Merged Purchasing Organization in Russia,” op. cit.

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