The Renault-Nissan Alliance 2

The Renault-Nissan Alliance

2

1998 Snapshot

0

❐ Sales: FF 243,934 million($ 40,552 million)

❐ Production: 2,197,395 units

❐ Employees: 138,321

❐ Sales: ¥ 6,565bn($ 49,732m)

❐ Production: 2,754,598 units

❐ Employees: 137,201

$ 1 = FF 6.02 As per annual report (March 31st, 1998)

Year ended on December 31st, 1998 Year ended on March 31st, 1998

3

Transaction Rationale: Existing Rankings

14.9% 14.9%

10.0%

9.0%8.4%

5.0% 4.9%4.3% 4.3% 4.3%

2.9%2.4% 2.4% 2.3%

1.6%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

GM

(+

Isuz

u)

For

d (+

Vol

vo+

Maz

da)

Toy

ota

(+ D

aiha

tsu)

VA

G

Dai

mle

r-C

hrys

ler

Fia

t

Nis

san

Hon

da

Ren

ault

PS

A

MM

C

Hyu

ndai

(+

Kia

)

Suz

uki

BM

W (

+R

over

)

Dae

woo

(+S

sang

yong

)

Source: CCFA December 1998. Based on production figures

4

Transaction Rationale: Combined Rankings

14.9% 14.9%

10.0%

9.1% 9.0%8.4%

5.0% 4.9%4.3% 4.3% 4.3%

2.9%2.4% 2.4% 2.3%

1.6%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

GM

(+

Isuz

u)

For

d (+

Vol

vo+

Maz

da)

Toy

ota

(+ D

aiha

tsu)

Ren

ault

+N

issa

n

VA

G

Dai

mle

r-C

hrys

ler

Fia

t

Nis

san

Hon

da

Ren

ault

PS

A

MM

C

Hyu

ndai

(+

Kia

)

Suz

uki

BM

W (

+R

over

)

Dae

woo

(+S

sang

yong

)

Source: CCFA December 1998. Based on production figures

Combined, Renault and Nissan will create the number 4 car manufacturer

in the world with a market share of 9.1%

5

Vol: 70

Mkt Sh : 5,8%

Vol: 4

Mkt Sh : 0,3%

Vol: 1

Mkt Sh : 0,1%

Vol: 2

Mkt Sh : 0,1%

Vol: 114

Mkt Sh : 7,9%

Vol: 108

Mkt Sh : 5,1%Vol: 10

Mkt Sh : 2,0 %

Vol: 17

Mkt Sh: 1,4 %

Vol: 2

Mkt Sh : 0,3%

Western Europe

South America

ChinaEastern Europe

N. Africa, ME, TurkeyAfrica

Russia, CEI

Central America

Australasia

ASEAN (*)

Vol: 1,758

Mkt Sh: 11.0%

N.B. : Volumes in thousand of units ; Source: Renault (*) Includes Hong Kong and Taiwan

1998 Estimated market shares of Renault by Geographical Area

Transaction Rationale: Markets Complementarity

6

N.B. : Volumes in thousand of units ; Source: Nissan (*) Includes Hong Kong and Taiwan

North America

Japan

Vol: 19

Mkt Sh: 1,6%

Vol: 8

Mkt Sh: 0,6%Vol: 15

Mkt Sh: 1,1%

Vol: 122

Mkt Sh: 10,8%Vol: 48

Mkt Sh: 5,9%

Vol: 132

Mkt Sh: 9,1%

Vol: 28

Mkt Sh: 5,6%Vol: 19

Mkt Sh: 0,9%

Vol: 171

Mkt Sh: 14,3%

Vol: 493

Mkt Sh: 3,1%Vol: 655

Mkt Sh: 4,0%

Vol: 903

Mkt Sh: 15,3%

Western Europe

South America

ChinaEastern Europe

N. Africa, ME, TurkeyAfrica

Russia, CEI

Central America

Australasia

ASEAN (*)

1998 Estimated market shares of Nissan by Geographical AreaTransaction Rationale: Markets Complementarity

7

Transaction Rationale: Markets Complementarity

Vol: 2,251

Mkt Sh: 14,1%

Vol: 12

Mkt Sh: 0,9%

Vol: 124

Mkt Sh: 10,9%Vol: 50

Mkt Sh: 6,2%Vol: 38

Mkt Sh: 7,6%

Vol: 16

Mkt Sh: 1,2%

Vol: 903

Mkt Sh: 15,3%

Vol: 655

Mkt Sh: 4,0%Vol: 89

Mkt Sh: 9,0%

Vol: 127

Mkt Sh: 6,0%

Vol: 246

Mkt Sh:17,0%Vol: 188

Mkt Sh:15,7%

North America

Japan

Western Europe

South America

ChinaEastern Europe

N. Africa, ME, TurkeyAfrica

Russia, CEI

Central America

Australasia ASEAN (*)

N.B. : Volumes in thousand of units; Source: Renault and Nissan (*) Includes Hong Kong and Taiwan

1998 Estimated market shares of the Alliance by Geographical Area❏ Leading market share in Europe and Japan❏ Global presence

8

Transaction Rationale: Fit of Product Range

Source: Company

0 100

200

300

400

500

600

700

800

900

Sub B

B

C

D

E+F+G

Vans

4x4

Pick-up

LCV

0100

200

300

400

500

600

700

800

900

Twingo

Clio, R5

Mégane, R 19

Laguna

Safrane, Spider

Espace

Express, Kangoo VU & VP, Trafic, Master

March, Micra, Cube

Almera, Sunny

Bluebird, Primera

Altima, Maxima, Infiniti, Q45, Cedric

Quest, Elgrand, Prairie

Safari, Patrol, Terrano

Pick-up

Atlas Civilian

The product lines are strong in key segments and complementary in all categories

9

Transaction Rationale: Production Sites Complementarity

8

0 0

2

7

3

0

2

4

6

8

10

Europe Japan USA & Mexico

Renault Nissan

3

0 0

1

6

3

0

2

4

6

8

10

Europe Japan USA & Mexico

Renault Nissan

Assembly Plants Engine Plants

Number of Sites

per region

Number of Sites

per region

10

Transaction Rationale: Complementary Expertise

- Cost Management - Global Platform and

Purchasing Strategy- Innovative Product & Styling

- Advanced Engineering and Technology

- Plant Productivity- Quality Management

Renault and Nissan’s areas of operating strengths are complementary and will be exploited to achieve improved revenue and earning growth

11

Transaction Rationale: Potential Synergies

(*): Based on sales of Renault and calendarized sales of Nissan as of December 31st, 1998(**): Other includes (i) Additional sales ; (ii) R&D ; (iii) SG&A ; (iv) Vehicle and engine assembly and other production costs ; (v) Capital expenditures savings

(US$ millions)

370471

1,400

607 657

1,600

120142

183

100105

0

500

1,000

1,500

2,000

2,500

3,000

2000E 2001E 2002E 2005E

Revenue enhancement Purchasing Manufacturing costsSG&A R&D

568(0.6%)*

1,182(1.2%)*

1,573(1.7%)*

3,000(3.2%)*

Other**

R&D = 41SG&A = 20Add’l Rev. = 16

Estimates based on Joint Studies

491

12

The Renault-Nissan Alliance: Why

❏ Excellent fit in terms of markets, products and production sites

❏ Outstanding complementarity of operating strengths

❏ The Alliance will generate significantly improved revenue and earnings growth

❏ Strong cost savings targeted through commonalization of platforms and powertrains and through mutual support

❏ Management teams have worked closely together since July 1998. The cultural fit is promising

❏ Renault has completed extensive due diligence and has reached a good understanding of Nissan’s situation

❏ Renault will contribute to Nissan’s Global Reform Plan (reduction of debt and costs) through:

➢ Capital injection

➢ Senior management support

➢ Realisation of synergies

The Alliance will create high value for both Renault and Nissan shareholders

13

Transaction Summary

❏ Nissan Motor 590.7 30,061 4,997 36.8%

❏ Nissan Diesel 9.3 473 79 22.5%

❏ European Financing Subsidiaries 37.8 1,923 320 100.0%

❏ Nissan’s South African Subsidiary 5.0 254 42

❏ Total Investment 642.8 32,711 5,438

❏ The transaction is only subject to regulatory approvals. Closing should take place by the end of May.

Net Investment Ownership

¥ bn FF m $ m

FF 1 = ¥ 19.65; $1 = ¥ 118.20 ; 1$ = FF 6.02

Minority interest

14

Transaction Summary: Terms of investment in Nissan Motor

❏ Renault will subscribe to a reserved capital increase in Nissan :

➢ 1,464 million shares bringing the total number of shares outstanding to 3,977 million

➢ ¥ 400 / share

✦ Share price as of [19/03/99]: ¥ 429

✦ 1-month-average: ¥ 453

✦ 3-month-average: ¥ 409

➢ Resulting ownership: 36.8%

Renault is paying a fair market price without premium

15

Transaction Summary: Terms of investment in Nissan Motor

❏ Additionally, Renault will acquire warrants for 540 million shares

➢ Exercise price: ¥ 400

➢ Maturity: 5 years

➢ Exercisable at any time up to a maximum of 39.9% in the first 4 years

➢ Exercisable with no restriction in year 5

➢ Warrants will be attached to ¥ 216 bn ($ 1,827 m) of 5-year bonds. These bonds will be immediately purchased by Nissan’s main banks and will strengthen Nissan’s financial structure

As part of this long term partnership, Renault has the flexibility to increase its participation

$1 = ¥ 118.20

16

Transaction Summary: Implementation of the Alliance

• Identify,• Study,• Propose

Vehicle

EngineeringPowertrains

Purchase

& Supply

Product Planning &

Related Strategy

Cross Company Teams

Global Alliance Committee

•Headed by Renault’s CEO and

Nissan’s President

•Senior Executives: 5 from

Renault and 5 from Nissan

Marketing

& Sales

by region

Cross Company Teams identify and propose synergies for the Alliance.

Renault and Nissan implement them

• Decide

• Implement

17

Renault’s Contribution to Nissan’ RecoveryNissan’s Global Reform Plan Targets

Renault’s Contribution to Nissan’s Recovery

❏ Improve financial position through sale of non-core assets and inventory reduction

❏ Reduce number of platforms and models

❏ Improve production efficiency

❏ Reduce sales and distribution costs in Japan

❏ Launch new models, reduce production costs and inventory levels in the US

❏ Review and strengthen current restructuring plan

❏ Improve financial structure through

➢ Capital injection

➢ Debt consolidation

❏ Develop synergies: total combined amount of US$ 3.3 bn over the 2000-2002 period

18

Impact of the Transaction on Renault’s Financials

❏ Renault’s investment in Nissan Motor and Nissan Diesel accounted for under the equity method:

➢ No consolidation of debt

➢ Goodwill amortisation over 20 years estimated at approximately FF 300m ($ 50m) per year

❏ Renault is not responsible for Nissan’s indebtedness

❏ The investment will be financed through cash and debt

❏ The impact on Renault’s financial income is approximately FF 1,100m ($ 183m) on a full year basis, i.e. FF 700m ($ 116m) after tax.

Transaction structure minimizes Renault’s financial risk

1 $ = 6.02 FF