Blog: Dave LeggettRenault reflections - anyone remember the proposed Renault-Volvo merger?

Dave Leggett | 9 February 2005

There were some pretty good financial results for Renault this week. Teaming up with Nissan may now look like a stroke of genius, but I wonder what would have happened if Renault had merged with Volvo instead, as looked likely in the early 1990s?

It could all have been very different perhaps – certainly the Nissan part of the story is central to Renault’s success now.

It’s interesting just to reflect for a moment on the cultural aspects of Renault-Nissan and the context of the original coming together.
Renault came along for Nissan when it was in a debt-ridden mess, so maybe the alliance proposition looked at from Nissan’s perspective was fundamentally one of being rescued and ‘it could be one heck of a lot worse’. Timing was good. When the Renault-Volvo merger negotiations collapsed the main reason was the gradual build-up of shareholder opposition on the Volvo side (‘big Renault eats small Volvo for breakfast’).

Nissan, by contrast, was in a precarious financial position and just plain glad to be bailed out.

Conditions inside the two respective corporate cultures were actually conducive to working together. Nissan’s executives were relieved to be helped out and to keep their jobs. And it was always a close strategic alliance rather than a full-on merger or takeover – and that must have helped too. Renault’s approach was pretty subtle and needed to be: Nissan was a big player as Japanese number two, even if financially challenged (and therefore, like Ali and Frazier, the two parties were relatively evenly matched).

Renault also needed a clear strategic direction as the French government sought to wind down its role in Regie Renault. There were all kinds of potential benefits from tieing up with Nissan - and after the Volvo fissure, there was pressure for this one to come off. Renault needed Nissan too.

And the end result seems to be a coming together of two corporate cultures for mutual benefit, rather than a competing struggle for dominance or a power trip that festers some long-term resentments (see DaimlerChrysler).

Anyway, Renault-Nissan looks like an untypical success story in an automotive industry history littered with many less than successful alliances, mergers and acquisitions.
But if Renault and Volvo had got together, Renault and Nissan would likely never have happened. There’s an old saying: every cloud has a silver lining.


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