Renault-Nissan-Daimler alliance

May 28th, 2010 § 4

Soon after the alliance was officially confirmed, Automotive News published an article called “ Brand-image killer or sensible move? Analysts debate merits of Renault-Nissan-Daimler alliance” where several quotes were posted. Among them I found interesting two comments:

“…We keep our skeptical stance on Daimler, also with regard to a possible dilution of the brand”

“Fundamentally, this is really a deal between Daimler and Renault. The number of (Nissan luxury unit) Infiniti cars that can take Daimler’s engines is extremely limited. I can’t see a clear picture of a meaningful cooperation between Nissan and Daimler. It seems Nissan has just been roped in for the money. I can appreciate the attempt by the partners to look for synergies and go into this cooperation, but when it comes down to it, you can’t help but ask, ‘Where’s the beef?’”

These are comments coming from large banks and they are biased toward the investment side of the business. As an investor, would you put your money in this alliance? Would this alliance create a profit for you?

Let’s look at this alliance now from the strict point of view of the customer. He will possibly put money in this alliance, not for an eventual profit, but for a product of it, an automobile. And the key word here is possibly.

The cost savings, compliance with the new EU CO2 and new fuel savings regulations and so on make perfect sense for an alliance up to a certain point, that point being what Michael Punzet rightly calls the dilution of the brand.

Car companies are very powerful cultures, with their own particular brand image, and most of the time these cultures and their images, like water and oil, don’t mix. They don’t mix in the corporate offices and they don’t mix in the eyes of the consumers who get confused or, when it comes to the more devoted ones, disappointed. That’s because people love brands, trust them and live them.

It will be interesting to see what will come out of this alliance. Renault brings to the table the success of the dacade-old alliance with Nissan, which saved an almost bankrupt company and worked around the brands keeping their identities clean, meaningful and independent.
Daimler, on the other hand, brings the embarrassing experience with Chrysler and the struggling Smart brand. A bad experience is a bad experience and if you learn from it, it can change into a big advantage.
As a premium brand, Daimler’s greatest weakness is in the small vehicle segment and that’s where the alliance with Renault-Nissan will take effect.
Both the French and the Japanese are very strong in this segment and hope is that Daimler will know how far the collaboration should go before the brand dilution start taking place and their image will suffer.
Let’s hope Daimler will not bring out from this collaboration a Cygnet equivalent.

Doing shared work in this alliance, all three companies separately should ask themselves two questions each time they go through a new step: 1 Who am I ?,
2 What do I stand for ?
If the answer is not strong and clear and if the product they put their badge on doesn’t reflect that strong and clear message, they should not follow that trail. They’ll get lost. And currently there are enough lost brands out there. The car industry doesn’t need one or a few more.

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