Thursday 27 March 2014

Renault-Nissan head for more ‘convergence’

The Renault-Nissan alliance is about to embark on its next significant wave of integration: the convergence of engineering, manufacturing and supply chain management, purchasing and human resources from 1 April.

Renault and Nissan joined forces in 1999, when Renault invested 643 billion yen (approximately €5 billion or US$ 5.4 billion at the time) for a 36.8% stake in Nissan, which at the time was close to bankruptcy.

Since then, the companies have reached sales of 8.3 million units, up from 4.8 million units in 1999, and moved into the top tier of global automakers. Today, Renault has a 43.4% stake in Nissan, while Nissan has a 15% stake in Renault.

Renault-Nissan alliance chairman and chief executive officer Carlos Ghosn claims: “Renault and Nissan have charted a unique course for 15 years, maximizing synergies while nurturing each company’s distinct brands and corporate culture.”

The Renault-Nissan alliance is now the auto sector’s longest-lasting and most productive cross-cultural collaboration - a model business case in an industry notorious for corporate breakups.

In 2013, the alliance, which included AVTOVAZ – Russia’s largest automaker – sold a record 8.3 million cars. And the alliance accounts for one in 10 cars sold worldwide, the fourth largest car group globally. The Alliance has eight brands: Renault, Nissan, Renault Samsung, Infiniti, Venucia, Dacia, Datsun and Lada.

The alliance generated approximately €2.8 billion in synergies in 2013, another new record. Synergies are generated from cost reductions, cost avoidance and revenue increases. Only new or incremental synergies – not cumulative synergies – it is claimed are accounted for every year.

By 2016, that amount is expected to rise to at least €4.3 billion following convergence of engineering, manufacturing and supply chain management, purchasing and human resources.

Convergence marks the next step in the 15-year evolution of the alliance. Under the convergence plan, the four key functions will be jointly managed by Renault and Nissan, with a newly appointed alliance executive vice president leading each function, and a new management committee to oversee implementation.
                                     Emerging markets

When the Renault-Nissan alliance was formed in 1999, about 1% of total group sales came from the so-called BRICs -- Brazil, Russia, India and China. In 2013, more than 30% of total group sales came from these four countries alone. Also in 2013, the alliance launched an all-new shared vehicle architecture specifically for emerging markets, called CMF-A.

In 2013, the Renault and Nissan sold a cumulative 134,000 zero-emission vehicles worldwide since December 2010 when Nissan LEAF went on sale, more than all major automakers combined.

Since 1999, the alliance has expanded to accommodate new projects and partners worldwide.  Today, the alliance owns a majority stake in a joint venture that controls AVTOVAZ. The alliance also has important strategic relationships with Germany’s Daimler, China’s Dongfeng Motor, India’s Ashok Leyland and Japan’s Mitsubishi Motors.

The Renault-Nissan Alliance employs about 450,000 people around the world, including at AVTOVAZ and Dongfeng Nissan Passenger Vehicle Company, Nissan’s joint venture with China’s Dongfeng Motor.             ∎

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