Daimler thinks small with big Renault/ Nissan tie-up

The three carmakers are joining forces to focus on smaller cars. Good news for Sunderland?

Last Updated: 06 Nov 2012

The ailing car industry continues to consolidate: German auto giant Daimler has just confirmed that it will join the Renault/ Nissan alliance, with all three carmakers taking small stakes in each other. The aim is to combine resources to drive up volumes and create more economies of scale. But although they’re thinking big, they’ll focus on small: apparently they’re keen to muscle in on the compact car segment. Since Nissan will be building most of its new electric car batteries in Sunderland, this tie-up of three continental car giants may, oddly, be good news for UK jobs...

The deal will see Daimler take a 3.1% stake in Renault-Nissan, with Renault and Nissan both taking a 1.55% stake in Daimler in return. The idea is that they’ll then be able to work together to develop small cars (including electric vehicles) – which is almost certainly going to be the only sector of the car market likely to see much growth in the coming years. The deal makes sense on paper: Daimler’s pretty good at engines, which should benefit Renault/ Nissan, but judging by how many Smart cars it has shifted recently (not as many as you’d expect, given their relatively green credentials), it could do with a bit of help on the sales and marketing front.

The three car-makers said the deal would ‘increase competitiveness of all partners through a substantial increase in volumes, leading to economies of scale and cost-sharing in development,’ while Daimler chairman Dieter Zetsche talked about boosting his company’s presence in the ‘small and compact car segment’. It certainly needs to try something: last year the German company racked up losses of about €2.6bn. Although Renault isn’t exactly in a strong position either: the French carmaker has just recorded its first loss since privatisation in the mid-1990s.

Although they’ve been pretty reticent about just how much money they hope to save via this arrangement, presumably there will be room for cost-sharing (aka job cuts). However, it should be good for the UK: if this helps the three build more electric cars, with their lithium-ion batteries, the Nissan factory in Sunderland should be kept nice and busy. We’re sure that will go down well with redundant workers on the Continent…

In today's bulletin:

Brown hammers business leaders as Government forced into concessions
Daimler thinks small with big Renault/ Nissan tie-up
Bye-bye Bebo? AOL gives up on $850m mistake
Editor's blog: Unilever boss says leaders must take the long view
Will our mobile phone networks run out of airwaves?

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