Renault Nissan Alliance set to seek further manufacturing synergies
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Renault and Nissan are to ramp up their decade-old Alliance, in a bid to reduce costs and increase profitability.
The pair say that synergies already identified for 2009 will contribute eur 1.5 billion in free cash flow equally to the partners – mostly by taking cooperation to new levels across manufacturing and logistics, powertrains, vehicle engineering, purchasing, sales and marketing, and R&D.
"Over the last decade, we used the Alliance to develop win-win synergies between Renault and Nissan, and that approach worked well when both were profitable and growing," comments Carlos Ghosn, chairman and CEO of the Renault-Nissan Alliance.
"Today, we have to move faster. Seeking synergies is no longer optional, but mandatory. We have assigned a group of experts to focus on building greater synergies to get us through the crisis and position us competitively for the future," he adds.
That means going well beyond its achievements to date, which include shared platforms and powertrains, cooperation on advanced technologies, standardisation of manufacturing methods, expansion of the product line-ups and, effectively, an extension of the global footprint for each partner.
Combined vehicle sales have increased from 4.9 million units in 1999 to 6.9 million in 2008 (including Avtovaz), making the Renault-Nissan Alliance the world's third-largest automotive group.
Ghosn suggests that manufacturing and logistics synergies alone are expected to account for eur 363 million savings. He says that the partners will continue to share production facilities to benefit from local industrial opportunities, manufacture in local currencies and optimise existing plant capacity.
This year, that means Renault's plant in Brazil will produce two additional Nissan vehicles, while Nissan's factgory in South Africa builds two additional Renault vehicles. By the end of 2009, a total of 11 vehicles will be cross-manufactured, while in logistics, Ghosn expects further savings from inbound and outbound logistics by sharing additional CKD centres, vehicle components and standardising logistics flows, particularly in Europe.
It's a similar story in powertrains, where the expectation is eur 289 million uplift, resulting from exchange of engines generating savings on development, purchasing and manufacturing. One example is the development by Renault of new small, turbo-charged petrol engines from Nissan's engine base. So far, 50% of powertrain components are shared.
Ghosn also explains that the Alliance has now set up a small dedicated team of six people from Nissan and five from Renault, which, starting on Monday will push for greater common activity and standardisation. Their focus, he says, will be on: purchasing, global sourcing, common platforms and parts, powertrains, support functions, global logistics, information systems, research and advanced technologies, and zero emission business.
