December 21, 1999

Renault and Nissan to study the development in Europe
of a joint commercial organization

The strategy will allow Nissan to maximise the benefit of its alliance with Renault, whose market presence in Europe is almost four times greater than its own (11.3 per cent vs 2.9 per cent in 1999). Separate sales and marketing teams, at both European and national level will ensure a strong focus on delivering the individual Renault and Nissan brand benefits to European consumers, while aiming to share support functions relying on Renault's existing organisation. Detailed studies to implement these objectives will be presented to the social bodies in due time for decision by management before the end of April.

As announced in October, both Renault and Nissan will develop their European dealer organisations around the concept of common hubs controlling an expanded market area made up of both Renault and Nissan dealers. Depending upon the relative local strengths the hub may be operated by an existing Renault or Nissan dealer or a new partner. The concept will ensure lower distribution costs and a strengthening of dealers' ability to deliver excellent sales and service to consumers.

At country level the study team will consider two strategies; two distinct brand teams operating through a single organisation, or through a dual organisation, in each case with a focus on sharing "back office" functions, including finance and administration. In addition, teams will consider the best way for both brands to share a common support organisation for business management, training, market research etc. Logistics for parts and vehicles will be shared.

At European level the study of the most efficient and focused structure will consider the possibilities of shared operations where these are not related to the brand. The evaluation will include sales and marketing operations (not related to brand management), finance and accounting, information systems, and logistics.

The overall aim is to maximise the Alliance's market share and profitability by scrutinising the entire distribution chain from local dealer to corporate European level. The setting up of this new organisation will represent for Renault an improvement of quality for the customer and lower distribution cost.

The results of the study will allow Nissan to concentrate on the development of its brand and achievement of profitable growth in Europe based on higher efficiency and lower distribution costs. Based on Renault's already strong market presence this restructuring means Nissan will now be able to achieve growth in Europe within the Alliance, and reinforce the Alliance's position as one of the major forces in the European industry. The Alliance's mid-term objective is to grow its market presence above 17 per cent.

This comes two weeks after Renault announced it will enter the Mexican market, building two Renault vehicles at Nissan's Mexican plants for sale through Renault dealers mostly developed by Nissan's existing dealer network. Both Alliance partners will continue to expand and strengthen their operations globally, taking full advantage of Renault and Nissan's presence and organisation in individual markets.