The Rise of International Co-Operation in the European Automobile Industry: the Renault Case

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Abstract
This article first analyses international strategies of European automobile manufacturers. Through a description of their corporate development since the early 1970s it shows that these groups, which still remain mainly European and non-globalized, have developed numerous specialized alliances, but have also used mergers and acquisitions as a way of enlarging their corporate size and their geographic scope. The major conclusion is to predict more international mergers between European groups in the future. As the international crisis in the sector continues, and as international competition increases within their formerly protected markets, these groups will have to join forces through close co-operation and merger. The second part of the article develops the case of Renault's international strategy. It analyses how this group improved the competitiveness of all its European operations, but failed in the USA and still remains today relatively under-internationalized. The agreement signed in 1990 with Volvo is then described as a highly complex strategic alliance which had to move towards a merger, finally decided at the end of 1993. This merger process failed mainly because nationalist barriers exist to international co-operation in the automobile industry. The recent take-over of Rover by BMW, however, shows that merger remains an appropriate strategic answer.

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