Daimler to Join Renault-Nissan - Analyst Blog

France’s Renault SA and its Japanese alliance partner Nissan Motor Co. (NSANY) have agreed with Germany’s Daimler AG (DAI) to acquire mutual equity stakes that would add the latter to the alliance. Nikkei Business Daily reported that Renault and Daimler would exchange interests of about 3% with each other, while Nissan would enter a similar cross-shareholding arrangement with Daimler.

In December last year, Daimler and Renault announced plans to jointly develop small cars. The talks extended till last month.

Daimler is interested in enhancing the profitability of its Mercedes A-Class and smart fortwo cars by sharing the development of vehicles and engines with Renault and thereby, Nissan. In 2009, sales of smart fortwo cars plunged 41% to 14,600 units while sales of Mercedes A/B Class fell 14% to 215,500 units.

In 1999, Renault-Nissan was formed, in which Renault held a 44.3% stake in Nissan, while Nissan held a 15% stake (non-voting) in Renault. In 2006, General Motors had revealed its plan to join the alliance. However, the talks failed in the same year.

Although Daimler has a history of unhappy tie-ups with other carmakers including Mitsubishi, Hyundai and Chrysler, it does need a partner for small cars, an area where it is struggling to be profitable.

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