An alliance of two losers?
That is too harsh a pronouncement on the news that Daimler and Renault are talking about a possible cross-shareholding. Nevertheless it does seem striking that the two European carmakers that probably performed worst in the recent crisis are talking about propping each other up. You would have thought that Daimler’s ill-fated “marriage in heaven” with Chrysler (which ended very much with a divorce on earth) would have put the owner of Mercedes off talks with mass-market manufacturers. But the German group faces a huge problem: consumers want smaller cars, but it is not very good at making them profitably.
Smart may now have broken even,k as Dieter Zetsche, Daimler’s chief executive, was at pains to tell me at the Geneva motor show. But this is the same Smart that cost Daimler more than €3bn in cumulative losses before that. Mercedes’ A- and B-Class cars, never the best-looking vehicles on the road, have also suffered from poor profitability.
So some kind of cooperation with a carmaker with a good small car reputation seems worthwhile. Think BMW and Peugeot.
But is Renault the right partner?
The French carmaker has had an awful crisis and its model line-up looks pretty feeble. It has pretty much put all of its eggs in the electric car basket. That might prove to be a far-sighted bet. But it also might prove to be spectacularly wrong. (It is no surprise that nearly every other big manufacturer thinks it will be the latter).
It is a company that faces questions about its management (can Carlos Ghosn, no longer seen as the star he once was, really run both Renault and Nissan?) and state interference (the French state – its biggest shareholder – recently got very worked up about plans to produce the Clio in Turkey).
Still, Renault has the small car expertise. And for that reason it can play hardball with Daimler.
Mr Zetsche needs to remember the ghost of Chrysler before he gets too chummy with Renault.
