By Yoko Kubota And Jason Chow
Renault SA and Mitsubishi Motors Corp. are scrapping a plan to
cooperate on producing and selling sedans, a blow to the French
auto maker's plans to exploit its spare capacity and to the
Japanese manufacturer's hopes of expanding its product range in the
U.S.
The move, confirmed by a Mitsubishi spokesperson, is a setback
for the broad cooperation plan Renault, its alliance partner Nissan
Motor Co., and Mitsubishi struck in 2013 to reduce typically steep
development costs.
"We were conducting a feasibility study hoping for a win-win
situation. But it wasn't feasible," said Tetsuji Inoue, a spokesman
for Mitsubishi Motors. Costs and currency-related issues weighed on
the plan, Mr. Inoue said.
Partnerships are central to the Renault-Nissan alliance's
strategy. The two car makers--which aren't formally merged but
share purchasing, manufacturing and management systems--have
traditionally eschewed large acquisitions to grow their
business.
Under Chief Executive Carlos Ghosn, the alliance partners have
preferred to sign deals with rival car makers to share expertise
and manufacturing capacity as a way to defray high capital costs of
developing new cars. The alliance most notably signed a deal with
Daimler AG in 2010 to cooperate primarily on small cars and
vans.
Among the plans that Renault-Nissan and Mitsubishi were
considering was one to rebrand one of Renault's larger sedans made
at its struggling Busan plant in South Korea and sell them as
Mitsubishi cars in the U.S. and Canada.
Mitsubishi, one of Japan's smaller auto makers, is focusing on
sport-utility vehicles and pickup trucks. The auto maker doesn't
have a strong sedan lineup in the U.S., a popular segment in the
country, unlike Japanese rivals Toyota Motor Corp. and Honda Motor
Co.
For Renault, Europe's third-largest car maker by volume, the
plan represented a way for the company to introduce its models into
the U.S. market. The French car maker currently doesn't sell its
cars in the U.S., the world's second-largest car market after
China.
The companies were also considering rebadging a smaller Renault
sedan as a Mitsubishi car globally. This plan has also been
scrapped, Mr. Inoue said, though Mitsubishi is still considering
how to introduce such a car into the global market. It hasn't ruled
out searching for other partners.
Mia Nielsen, a spokeswoman for the Renault-Nissan alliance, said
"it is too early" to speak about details on future projects and
wouldn't confirm that the plan was being abandoned. A person
familiar with the matter said that the project was scrapped because
Renault didn't foresee enough sales volume to make the
joint-venture profitable.
Nissan and Mitsubishi are still considering joint development of
a small car, including an electric version, Mr. Inoue said. The two
auto makers already sell a jointly-developed 660cc mini car, which
is produced at a Mitsubishi plant in Japan.
Write to Yoko Kubota at yoko.kubota@wsj.com and Jason Chow at
jason.chow@wsj.com
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