Benz-Nissan-Renault technology tie-up

Mercedes-Benz, Renault and Nissan have secretly signed a deal for a massive technology-sharing agreement that will save the smart brand and cover millions of new cars every year.

The deal means Renault and Mercedes-Benz will share the new cars, develop new engines together and even make electrically-powered commercial vans together.

Renault CEO Carlos Ghosn and Daimler head Dieter Zetsche have personally overseen the deal -- a year in the making -- which will see Renault and Daimler (Mercedes-Benz’s parent company) take control of three per cent of each other's shares.

Benz insiders have been quick to insist the minority shareholding does not mean it is buying into the Renault-Nissan alliance or repeating its disastrous moves of a decade ago to take control of Chrysler or Mitsubishi. However, Nissan and Renault executives are pushing the allied link; with Nissan and its luxury Infiniti brand both very keen to use Benz architecture for its charge into Europe.

Even so, it has taken more than 200 meetings between Renault and Daimler engineers, financial experts and product strategy boffins to arrive at an official letter of understanding signed by the two bosses.

The implications of the tie-up could be huge and while the immediate priority will cover everything from Mercedes-Benz and smart branded cars to Renaults, it could also spearhead Infiniti's push into Europe and it could provide small engines for the entire Nissan family as well.

Project Edison is the umbrella name for a joint push to develop the next all-new smart, which will, finally, be built in both short- and long-wheelbase versions. That will allow Daimler to build the successor to the current, second-generation smart in both two- and four-seat configurations.

Smart has had a four-door car before, but the Mitsubishi-based forfour never sold well. That won't be the case for this 3.4-metre car, and insiders are predicting at least 400,000 units a year, because it will also provide the basis for the next Renault Twingo small car as well.

That means the Twingo will move from its front-engined, front-wheel drive configuration to the smart's rear-engined, rear-wheel drive layout. But Renault will not stop there with the smart architecture, with the short-wheelbase fourtwo version of the chassis underpinning the production version of the Renault Twizzy concept that was shown at this year's Geneva Motor Show. It may also find its way into Nissan's range for a Japanese city car to combat Toyota's iQ.

Both the next four-four smart and the Twingo will be built in Renault's plant in Revoz, Slovenia, while the two-door smart will continue to be built in its current plant in Germany. Insiders have admitted that Benz and Renault engineers will share the load on the project, with Benz in charge of quality and engineering, and Renault in charge of cost management and production engineering.

"We know we have had blind spots in our range that we needed to work on and smart was an obvious one," a Daimler insider admitted.

"We have long said that the future of smart depended on finding a partner for it, because we will never be profitable with 130,000 cars a year."

Where current small Mercedes four-cylinder engines are basically sleeved-down versions of larger four-cylinder engines, the new engine, due in three years, is being designed from the ground up to cover everything from 1.0- to 1.6 litres.

Not only that, but it will be modular in design, and capable of being built as a three-cylinder engine for use in the next smart range and as a range-extender engine for larger hybrid models.

"We were looking for a partner that could give us higher volumes and, with the smart, we thought it best to tie it together all in one package. This gives us four to 4.5 million engines a year," our Daimler source insisted.

The new four-cylinder engines will go into everything from the next-generation A- and B-Class models (B-Class artist's impression pictured) as well as at least two other new models Mercedes is planning to launch off the new, modular small-car architecture.

While that architecture is not available -- and is too expensive -- for Renault, the engines are not.

"We will develop them together and they are especially interested in direct injection and our turbo-charging technology," the Daimler source hinted.

"But that won't mean Renault will get the full Benz engines. There will be big differences."

Renault has had a team of engineers working at Mercedes-Benz headquarters in Sindelfingen, near Stuttgart, since around August last year to ensure it can be built cheap enough for Renault and with enough features for a Mercedes-Benz.

"Even if the French will say they have Mercedes engines, we will be putting all the expensive stuff on our engines that they will keep off theirs," our source insisted.

"It will be developed to be modular, so we can have a version with variable-valve timing, direct-fuel injection, Hyprex charging and all of our other technologies, but it will also be designed to be produced with fixed camshafts for Renault as well," our source insisted.

"They will be developed with our guys taking the engineering lead and their guys taking the lead in production engineering and cost-down."

But if the A- and B-Class architecture is too expensive for Renault, it could be just right for Infiniti, with Infiniti sources insisting the prestige Japanese sub-brand is keen to pick the eyes out of the Mercedes catalogue.

"If we are serious about making an impact in Europe -- and we are -- we will need small-car architecture and we will need diesel engines. This gives us a way to get them," one Infiniti spokesman insisted.

Those engines include Benz's powerhouse OM651 twin-turbo four-cylinder diesel, all the way up to its V8 turbo diesels, giving Mercedes an enormous boost in its economies-of-scale.

Those engines may not be needed by Benz when it replaces the S-Class, because insiders say the all-new S-Class will only be available as a Hybrid. Benz currently has a Hybrid version of its S-Class -- the S400H -- but it's not exactly dominating the model's sales.

Though its future is less secure than the new smart range, the Project 50 concept will provide a 3.5-metre, all-electric city car -- something that already has plenty of Mercedes-Benz people excited.

Though insiders also believe there may not be enough room between the four-door smart and the next-generation A-Class, it's also a concept that has Infiniti's product planners excited as well.

Now run by former AMG head, Volker Mornhinveg, Benz's commercial division is desperately keen for a smaller vehicle and, with Renault already insisting the next-generation Kangoo will be all-electric, he is keen to use the Kangoo.

"It is not a pretty vehicle and we would need to give it a visual Mercedes-Benz identity, so it won't be badge engineered at all," our source insisted.

"We have to invest in the tooling for a new side panel, including the A-Pillar, so it won't be cheap."

Mornhinveg is already preparing a batch of electric Vito vans, which will be shown at this year's Hanover Motor Show in Germany, and Benz insists it has both UPS and DHL lined up to buy them.

The Kangoo-based small Benz van will be an extension of this strategy.

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