Car-making giants Daimler and the Renault-Nissan alliance have confirmed a wide-ranging technical tie-up by buying 3.1 per cent of each other's companies. The alliance, tipped by the Carsales network last week, was confirmed at a press conference in Belgium overnight.
The multi-billion dollar deal, which began as a simple scheme to guarantee smart's long-term future, will see the smart, Mercedes-Benz, Renault, Nissan, Infiniti and Dacia sharing a range of components and functions: from platforms and engines; to suppliers, factories and even development programs.
Daimler Chairman Dieter Zetsche and Renault CEO and Chairman Carlos Ghosn (both pictured here) signed the final contracts on the deal in Brussels yesterday in a deal which transferred almost €1.2 billion worth of Daimler shares to Renault and a similar quantity of shares in the French company to Daimler. Renault already owns 44 per cent of Nissan, having taken control of the then-struggling Japanese car company in 1999.
In a deal simpler than it sounds, Daimler gets 3.1 per cent of new Renault shares, Renault gets 3.1 per cent of Daimler's shares, half of which it will swap with Nissan for another two per cent of Nissan shares. Both Renault and Nissan will each hold 1.55 percent of Daimler treasury shares.
But the deal is far deeper than a financial transaction, with the companies agreeing to develop small, three- and four-cylinder petrol engines, commercial vans, small and medium size passenger car and SUV platforms, diesel engines and even electric cars together.
The most immediate developments will be on-sale within two years, with Nissan's luxury brand, Infiniti, using a range of Mercedes-Benz petrol and diesel engines to spearhead its assault on Fortress Europe.
"Daimler and the Renault-Nissan Alliance are combining common interests to form a promising foundation for a successful, strategically sound cooperation that is based on a number of very concrete and attractive project cooperations," Dr Zetsche commented at the conference.
"Our skills complement each other very well. Right away, we are strengthening our competitiveness in the small and compact car segment and are reducing our CO2 footprint -- both on a long-term basis.
"We know that we can make brand-typical products based on shared architectures. The individual brand identities will remain unaffected."
Daimler sources say the deal gives the company greater engine volumes, lower development costs, far lower fleet CO2 figures and a safe future for smart. It's how it will work with its new partner that the automotive world is watching, however.
The Renault-Nissan Alliance has been a showcase in how to manage very different cultures and types of car companies, a point boss Ghosn acknowledges.
"The Renault-Nissan Alliance knows how to work successfully in collaborative partnerships, and this experience is extremely valuable in today's, and even more tomorrow's, global auto industry."
In contrast, Daimler's 'marital' history has been, at best, dreadful. It mated up with Chrysler in 1998 in a deal which ultimately cost the German company more than €100 billion, and had a five-year marriage to Mitsubishi which failed in 2005 as well. Smart too started as a joint venture.
Ghosn is well known for believing in further consolidation of the car industry and insisted any small carmaker should be very concerned at its ability to keep meeting technology, emissions and market demands into the future.
"If I was running a medium sized carmaker and I was watching this I would be a little bit worried," he said yesterday.
"This industry is more and more going towards volume and sharing investments and sharing knowledge to be relevant and competitive in the future. When you look at what we have to develop in terms of the engines and diesels and transmissions to be present in all the emerging markets and to be present in every market, no small or medium carmaker can afford that."
The whole deal, Zetsche admitted, began with Daimler thinking of ways to keep smart alive into the future. Last year, the one-model-brand's sales had slumped 14 per cent to just 114,000 cars.
The next all-new smart, due in 2013, will come in both two and four-door body styles and retain the traditional rear-engined, rear-drive layout. But the long-wheelbase smart will also be the basis for the next Renault Twingo small car and Renault will also build a tiny city car (something like the Twizzy concept car) off the platform.
Both the Renault and the smart ForTwo will be built in the current smart plant in Hambach, France, while both four doors will be built in Slovenia.
"The discussions started with smart," Zetsche admitted, "And then it went on to small displacement engines, which is another way to reduce CO2 in small vehicles.
"We will be looking at taking a smaller engine and adding the technology from larger engines to make them more efficient, so we could make them extremely efficient and that's where we're going."
Daimler will be in charge of developing a new range of three- and four-cylinder engines, with Renault donating its existing technology to the cause and Benz adding variable valve timing and lift, auto start-stop and turbocharging to give them a more Benz-style flavour.
The engines will be used in the next A- and B-Class Benzes, as well as the next generation of Clios and Meganes.
Daimler will also throw six-cylinder petrol and diesel engines into the mix, which will be snapped up by Nissan, especially, and Infiniti. Both companies are also developing all-new four-cylinder engines, ranging from 1.0-litre up to 1.8-litres.
In the commercial vehicle segment the first collaboration will be an all-new small van for the Benz lineup based on Renault's Kangoo. Due in 2012 it will be redesigned to fit the Benz family even though it will be built by Renault in France.
The Vito will also get new Renault diesel engines and transmissions.
It's not clear yet whether the deal will create synergies between Renault and Mercedes' respective heavy truck operations. Renault's truck brands (including Mack) are now owned by Volvo AB.
It will, however, definitely see the brands working closely together on electric vehicles and infrastructure.
"Our opportunity exists in electric cars," Ghosn insisted. "We are doing our own batteries and Daimler is doing their own batteries and that doesn't make sense.
"We want to try to see if we can share the work with hybrid, because we are both doing it and it's better not to do it twice. The point with electric and hybrid is that it's not a question about putting the technology on the market but about putting it in the market at an affordable price so we are not doing efficient cars that nobody can afford to buy."
There are no plans to share technologies or synergies in Formula One, though.
No need… As Ghosn pointed out, the top six cars in last week's Malaysian Grand Prix all had either Renault (Red Bull and Renault) or Mercedes-Benz (Mercedes-Benz, Force India and McLaren) power.
Read the latest Carsales Network news and reviews on your mobile, iPhone or PDA at www.carsales.mobi