Daimler Adds Two Renault Projects for Joint Powering Work

Daimler AG (DAI), the third-biggest maker of luxury cars, and French manufacturer Renault SA (RNO) said they’re adding two cooperation projects as their joint work on conventional and electric powering systems expands.

The automakers will develop a four-cylinder gasoline engine for use starting in 2016, and Daimler will license automatic transmissions to Renault’s Japanese partner Nissan Motor Co. (7201) and its Infiniti luxury brand to be made in Mexico, the companies said today at a Paris Motor Show presentation.

Renault and Stuttgart, Germany-based Daimler started cooperating in April 2010, and they produce delivery vans together. Daimler Chief Executive Officer Dieter Zetsche said work with Renault, led by CEO Carlos Ghosn and Chief Operating Officer Carlos Tavares, will continue broadening into small cars and emissionless vehicles, though the companies are unlikely to increase cross shareholdings.

“What is happening goes far beyond our initial expectations,” Zetsche said at the press conference. “We are very happy on our side with this partnership. The Carlos-and- Dieter show will go on.”

Daimler and Renault, which is based in the Paris suburb of Boulogne-Billancourt, reiterated that they’re doing research on fuel-cell technology and looking at procurement of battery and power-train components for electric cars.

Joint work on expanding the lineup for Daimler’s two-seat Smart city car, using the platform of the next generation of Renault’s Twingo to produce a four-seat version, is now proceeding after “initial tension” stemming from technological challenges, Zetsche said.

Van Components

Renault builds Daimler’s Citan delivery van based on its Kangoo model. Nissan’s Decherd, Tennessee, engine plant will start producing four-cylinder gasoline engines for the Infiniti division and Daimler’s Mercedes-Benz brand starting in 2014.

The French and German manufacturers forecast when they formed the partnership that the cooperation would generate 2 billion euros ($2.86 billion) in cost savings in five years when they formed the partnership. They each hold about a 3.1 percent stake in the other. The executives said today that they don’t plan to increase those holdings.

“We can be stable in this relationship” without the need of a deeper financial tie-up, Ghosn said.

Renault owns 43 percent of Yokohama-based Nissan, and Ghosn is CEO of both manufacturers.

To contact the reporter on this story: Dorothee Tschampa in Paris via dtschampa@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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