Renault is doing badly and counts on the Alliance. Nissan is doing very badly and doesn't talk about it.

How long have we been married for? (Behrouz MEHRI / AFP)
Prior to the release of Renault's 2019 financial results on Friday, the presentation of Nissan's results for the third quarter of the Japanese fiscal year, and thus for the first nine months, took place in Yokohama the day before.
Nissan executives took the opportunity to revise downwards their revenue and profit forecasts for the year, stating that these forecasts did not take into account the probable effects of the coronavirus.
Makoto Uchida also apologized to shareholders and announced that no dividend would be paid for the second half of the year. As a result, the dividend per share for the full year will have been divided by 6 from 57 yen to 10 yen for 2018.
Renault, the main shareholder, is obviously the first to suffer.
In fact, net income for the first nine months fell by 87.6% to 39.3 billion yen, while revenues fell by 12.5%.
The group is expecting a turnover of 10,200 billion yen for the fiscal year (-3.8% compared to the previous forecast in November) for 5.05 million vehicles sold (compared to 5.24 initially forecast), an operating profit of 85 billion yen (-43.3%) and a net profit of 65 billion yen (-40.9%).
In the third quarter alone, Nissan reported a quarterly net loss of ¥26.1 billion, the first time this has happened since 2008.
When you look at the detailed country or regional tables provided by Nissan, you can see that almost everywhere in the world, Nissan is underperforming the markets: in North America (including Mexico), the market is down 1.7% and Nissan by 10.2%; in Japan, the market is down 1.7% and Nissan by 6.9%; in Latin America, the market is down 3.8% and Nissan by 6.6%; in Asia and Oceania, the market is down 9.3% and Nissan by 11.7%; in Europe (including Russia), the market grew by 2% and Nissan sales declined by 16.2%.
Only the mini-car markets in Japan (-0.9% and +12.5% for Nissan) and China (-10.7% and -0.4% for Nissan) allowed Nissan to outperform!
Under these conditions, it is difficult to consider that Nissan is on the road to recovery. While there are some charts in the presentation to analysts that seem to indicate that, in North America, declining market share is associated with reduced incentives and inventory and recovering unit profits, overall it is difficult to see how the current quarter and the following year could not be worse.
In one section, "the rationalization of production capacities and the improvement of efficiency" on the one hand and "the 10% reduction in the variety of products" on the other hand are mentioned, but the redefinition of the role of each plant and the development plans of each one are said to be in progress.
Similarly, concerning products, it is recalled that Datsun will cease to be offered in Indonesia, but the discontinuation of low-performance models remains under consideration. Similarly, it is indicated that Nissan will optimise its investments by concentrating on technologies, models or regions where the company has "key competencies". This is basically, on reading the presentation, the only reference, at the very least discreet, made to the Alliance.
By comparison, in the presentation made the next day by Clotilde Delbos as in her speech, the Alliance and what Renault calls the "new paradigm for the Alliance" with the implementation of the "leader-follower" strategy within it are much more present, when it comes to presenting the 2020 outlook in particular.
While, seen from Paris, the form of parity in which the partners are is seen as an opportunity to finally make full use of the synergies that have too often remained potential after 20 years, there is no explicit trace of this idea in the presentation, in the words of Makoto Uchida or in the comments of the press.
One can see here the "political" strategy of a leader whose appointment was obtained with great struggle by J.-D. Senard in order not to alienate the anti-Alliance camp. We must also take through this discrepancy in the communications of Nissan and Renault the measure of the difficulties that await the implementation of the famous new paradigm.
The partners, and Clotilde Delbos in particular, now almost explicitly acknowledge the unfinished or even factitious nature of the pooling and the recurrent "doubling up" which very often resulted even though the division of roles was supposed to have been clarified.
This was understandable, particularly at Nissan, when the markets were rather buoyant and the performance was there. Today, in terms of both products and technologies, Renault is barely ahead of its competitors and PSA in the first place, neither is Nissan when we compare its performance with Toyota or Honda. It is difficult to reassure oneself by indicating on both sides that new products will be launched or that capacities will be adjusted to the volumes sold to reduce the need to sell off products.
In a context where both Nissan and Renault are already in difficult positions even though the market downturn has not yet been fully felt, the Chinese health crisis has not yet been fully integrated and electrification is still in its infancy commercially, the implementation of these routine solutions at one or the other of them will not be enough in the face of competitors who are doing better, have more resources to invest in products and technologies and are not standing by.
Awareness of this strategic reality seems to be taking shape at Renault today, and the 2020-2022 plan is expected to embody real ambition. Nissan is currently lagging behind, even though its current and future difficulties are even more far-reaching. The coming months will show whether this parity of partners in difficulty will enable the Alliance's management by consensus advocated by J.-D. Senard to finally gain new momentum. The least that can be said for the moment is that the basic work remains to be done.
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Translated with, corrections by Géry Deffontaines


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