Renault, Nissan and Daimler sign up for green car-share deal

Alliance includes engine technologies and development of new cars

Renault, Nissan and Daimler are embarking on a three-way, equity-sharing alliance to jointly develop new small cars, light commercial vans and engine technologies.

In a tie-up tipped to be worth €2bn (£1.8bn) to all three participants over the coming five years, Daimler will take newly issued Renault shares equivalent to 3.1 per cent of the French group, and will receive 3.1 per cent of Nissan's existing shares from Renault. In return, Renault is to receive 3.1 per cent of Daimler's shares, half of which will be exchanged with its Japanese partner in return for 2 per cent of Nissan's shares.

The deal gives Daimler access to Renault-Nissan's small-car engine technology, both for its struggling Smart range and for compact Mercedes Benz models. Meanwhile, Nissan will benefit from Daimler engines for its Infiniti premium range. Renault and Daimler will also work together on the next generation of the Renault Twingo and Daimler's smart fortwo, including electric versions. And Renault and Mercedes will develop an all-new, entry-level vehicle to be built from 2012 at Renault's Maubeuge plant in France.

The arrangement will be managed by a 12-strong committee headed by Carlos Ghosn, the chairman of the Renault-Nissan Alliance, and Dieter Zetsche, the chairman of Daimler.

Daimler was quick to emphasise that its latest move sets out specific areas for collaboration, distancing itself from the disastrous merger with Chrysler that was finally reversed in 2008 after nine years of losses. Dr Zetsche said yesterday: "Daimler and the Renault-Nissan Alliance are combining common interests to form a promising foundation for a successful, strategically sound co-operation that is based on a number of very concrete and attractive project co-operations."

Mr Ghosn said: "This agreement will extend our strategic collaboration and create lasting value for the Renault-Nissan Alliance and Daimler as we work on broadening and strengthening our product offering, efficiently utilising all available resources and developing the innovative technologies required in the coming decade."

The Renault-Nissan-Daimler alliance is just the latest in a rash of consolidation and co-operative agreements between large-scale car makers looking for ways to boost economies of scale and share high upfront development costs in new areas such as hybrid electric engines. Deals range from full-blown mergers, such as the tie-up of Chrysler and Fiat in early 2009, to simpler platform-sharing arrangements such as that between the Ford KA and the Fiat 500. But the underlying strategy is the same. Mike Steventon, the head of automotive at KPMG, said: "We are in an environment where the industry is insufficiently profitable to support the future investment that is needed."

The trend is not new. Renault and Nissan set up their alliance 11 years ago, and a similar strategy is behind VW's acquisitions of Audi and Skoda in the 1990s. But the combination of recession-hit profits and a growing urgency from the environmental agenda has forced the global industry to pick up the pace. "We are now seeing numerous platform-sharing agreements, but manufacturers have taken a lot of time to get to this point because of the macho dimension to the auto industry," Mr Steventon said. "It was happening before but only sporadically, whereas in the aftermath of the recession it has become a necessity to share."

The majority of such deals involve volume car makers – rather than prestige marques which risk diluting their brand. "The acceleration of platform-sharing is particularly around areas that consumers do not see as differentiators," Mr Steventon said. "The manufacturers are sharing non-differentiators of the past in order to free up resources to focus on differentiators of the future, such as hybrid technologies."