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Renault-Nissan Alliance Recognizes its 10-Year Anniversary

March 28th, 2009
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Signed on March 27, 1999, the Renault-Nissan Alliance has built a unique business model that has created significant value for both companies.

For 10 years, employees at Renault and Nissan have worked as partners with attitudes of mutual respect and company pride while keeping separate brands and corporate identities.

“From the beginning, the Alliance has been based on the premise of trust and the pursuit of strategies aimed at profitable growth,” says Carlos Ghosn, President and CEO of Renault and Nissan. “We continue to honor these principles, even as we are continually adapting to the current operating environment, which is severe. The Alliance is equipping Renault and Nissan not only to survive the global financial and economic crisis, but to be in a better position to compete effectively after this crisis ends.”

Key indicators illustrate benefits the Alliance has delivered to both companies:

  • Profitability and market capitalization*
    The Alliance has led to greatly increased profitability and market capitalization for both companies, from 1999 until the current global economic and financial crisis.

    In terms of market capitalization, Renault’s more than tripled, growing from 8.4 billion euros to 27.6 billion euros. Renault ranked sixth in the car industry in 2007, compared to its eleventh-place ranking in 1999. Over the same period, Nissan’s market capitalization quadrupled, from 9 billion yen to 34.2 billion yen. The company ranked at the fifth position in 2007, compared to tenth in 1999.

    The average operating profit for the period of 1999 to 2007 increased significantly compared to the period of 1990 to 1999. Operating profit was multiplied by five for Renault, from 442 million euros to 2.126 million euros, and multiplied by eight for Nissan, from 79.6 billion yen to 636.1 billion yen.
  • Cash contribution
    Initially, Renault made a cash contribution of 6.4 billion euros to Nissan. Nissan has since contributed more than 11 billion euros to Renault’s bottom line. There has been a substantial exchange of cash,
    capital, profit and dividends between the two companies.

    * Reference is made between 1999 and 2007 as Nissan financial results for 2008 will be available at the end of the current Japanese fiscal year, which ends March 31, 2009.

Ten achievements in 10 years of the Alliance

1. Sales
Combined sales increased from 4,989,709 units in 1999 to 6,090,304 (without Avtovaz sales) in 2008.

2. Renault-Nissan Purchasing Organization (RNPO) scope is 100%
RNPO is the Alliance’s largest common organization, negotiating on behalf of Renault and Nissan. From April 1, 2009, its joint purchasing activities will account for 100% of Alliance purchases, compared to a scope of 30% at its creation in 2001.

3. Common platforms and common parts
Shared platforms and common parts (parts that are not visible to the customer such as gearboxes or air-conditioning system) are tools used by the Alliance to make economies of scale and reduce development and production costs.

The common platforms, namely the B platform (notably Nissan Tiida/Versa and Renault Clio) and C platform (notably Renault Mégane/Scénic and Nissan Qashqai), represented more than 50% of the vehicles sold by Renault and Nissan globally in 2008.

4. Exchanges of powertrains and common powertrains
To capitalize on the powertrain expertise of both partners (Renault for diesel and Nissan for gasoline), the Alliance co-developed common engines and gearboxes, including a six-speed manual gearbox and a new V6 diesel engine. The Alliance also exchanges existing engines or gearboxes -- for example, the Nissan 3.5-liter gasoline engine for Renault Laguna and Renault 1.5-liter diesel engine for Nissan Qashqai). In total, eight engines are commonly used.

5. Expansion of the portfolio of advanced technologies
Renault and Nissan are cooperating on strategic fields of research and advanced engineering. Renault and Nissan have a common technology plan based on four common pillars: Safety, Environment-CO2, Life-on-Board and Dynamic Performance.

Concerning zero-emission technology, Renault and Nissan are focusing on electric vehicles: so far, nearly 20 agreements have been signed with governments and corporations to launch the first electric
vehicle in 2010 and to mass market a full range of electrical vehicles in 2012.

6. Manufacturing standardization
The Renault Production System (RPS), the standard used by all the Renault plants, borrowed extensively from the Nissan Production Way. Since it has been implemented, Renault productivity has improved by 15 percent.
Using the best practices of Renault and Nissan, the Alliance partners have developed the Alliance Common Process or Alliance Integrated Manufacturing System (AIMS), which will initially be used at greenfield sites in India (Chennai) and Morocco (Tangier).

7. Cross production
Within the Alliance, each company has the opportunity to use the manufacturing capacities of its partner. Today, Renault’s plants produce Nissan vehicles in Korea (Almera Classic) and Brazil (Livina), whereas Nissan assembles Renault vehicles in South Africa (Sandero), Mexico (Clio) and Spain (Trafic).

8. Global footprint
Due to geographical complementarities, Renault and Nissan cover key markets on all continents. Renault’s historical territories are Europe, North Africa and South America; Nissan’s major markets are Japan, North America, Mexico, China and the Middle East. Since 2005, Renault and Nissan have been entering new territories together, such as India, in order to expand their global footprint.

9. Expansion of product line-ups
The Alliance has contributed to the expansion of product line-ups. Nissan has increased its LCV range in Europe by badging Renault products: Renault Kangoo/ Nissan Kubistar, Renault Master/ Nissan Interstar, Renault Trafic/ Nissan Primastar. On Renault side, Koleos has been designed by Renault but developed by Nissan and is using advanced Nissan 4x4 technology.

10. Cross-cultural management
As a global industrial and economic actor, the Renault-Nissan Alliance built a unique experience in multi-cultural management at all levels. Each year, more than 30 teams with Renault and Nissan employees from all regions and functions work together to identify synergies and best practices. Thousands of people with cross-cultural experience have been in collaboration since the beginning of the Alliance.

“We are proud of all we have achieved in the past 10 years,” says Carlos Ghosn, “and we are looking forward to realizing even more of our potential in the future. Leveraging our partnership fully in the Alliance, we will be taking further steps to deepen synergies between Renault and Nissan that will contribute to the profitable growth of each company.”

The Renault-Nissan Alliance will announce the complete list of synergies (as announced in February) in May 2009.

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