Nissan: Renault-Nissan Alliance Posts Record Synergies of 2.69 Billion Euros in 2012, with Particular Gains in Emerging Markets

  • Synergies up 54% from 1.75 billion euros in previous year
  • Sharp increase shows partnership’s momentum keeps accelerating
  • Purchasing, powertrain and vehicle engineering areas remain the biggest contributors
  • Synergies expected to keep growing with acceleration in non-engineering areas

PARIS – The Renault-Nissan Alliance posted record synergies of 2.69 billion euros in 2012, up from 1.75 billion euros in the previous year.

The 54% jump shows that the partnership’s momentum continues to accelerate. Formed in 1999, Renault and Nissan enjoy the longest-lasting and most productive cross-cultural partnership in the auto industry.

Synergies come primarily from cost reductions and cost avoidance. Only new synergies – not cumulative synergies — are taken into account every year.

Renault and Nissan collaboration increased worldwide, particularly in emerging markets where both companies are expanding their industrial footprints.

“Synergies and greater economies of scale allow Renault and Nissan to compete in an elite tier of the world’s top automakers globally,” said Christian Mardrus, Renault-Nissan Alliance Managing Director for Logistics and the Office of the CEO. “We expect to generate even more synergies going forward, particularly in emerging markets such as Brazil, Russia, India and China.”

Purchasing, powertrain and engineering synergies remain the highest potential

As in previous years, the top contributors to synergies by business unit in 2012 were purchasing (851 million euros), powertrain (709 million euros) and vehicle engineering (546 million euros).

Synergies increasingly come from Asia and emerging markets such as Russia, where the two manufacture vehicles and powertrains together at the same plants.

The Alliance’s plant in Chennai, India, for example, is home to the biggest platform-sharing project within the Alliance. The plant, which has an annual production capacity of 400,000 units, produces both Renault and Nissan vehicles for export and the local market.

In Russia, the Alliance builds cars together with AVTOVAZ, Russia’s largest automaker, at the same facility in Togliatti. Last year, the Alliance gained a controlling interest in the maker of the iconic LADA brand through a joint venture with state-owned Russian Technologies.

In South Korea, Nissan will start building the next-generation Rogue at the Renault Samsung Busan plant next year. Last year, the Alliance made significant cost improvements to the manufacturing process before the start of production of the sports utility vehicle. The improvements will increase production of the Nissan Rogue and will boost efficiency throughout the plant.

Since 2009, all purchasing at the Alliance has been handled by the Renault Nissan Purchasing Organization – the largest common Alliance organization. Thanks to the 8-million-unit scale of the Alliance, RNPO can negotiate better pricing than small companies could negotiate individually.

Powertrain synergies are derived from the co-development and exchange of engines and gearboxes. Thanks to their historical centers of excellence, Renault specializes in diesel and down-sized gasoline engines and manual transmissions, while Nissan specializes in natural aspirated gasoline engines and automatic transmissions.

Vehicle engineering synergies are mainly derived from shared platforms and common parts.

Common Module Family

In 2012, the Alliance also began to derive synergies from a new approach called Common Module Family (CMF) which involves the consolidation of both platforms and parts. The CMF approach is a shared system that enables Renault and Nissan to collaborate even more closely on products and is expected to be a major contributor to synergies moving forward.

CMF will gradually be extended to Renault and Nissan models between 2013 and 2020. CMF will be first applied to the compact and large car segments, followed by models in other segments.

CMF is expected to generate an average 30-40% reduction in entry cost per model and a 20-30% reduction in parts cost for the Alliance.

In addition to upstream functions, areas such as sales and marketing are also expected to contribute to synergies growth going forward.

The Renault-Nissan Alliance is a strategic partnership between Paris-based Renault and Yokohama, Japan-based Nissan, which together sell one in 10 cars worldwide. The companies, which have been strategic partners since 1999, sold 8.1 million cars in nearly 200 countries in 2012. The Alliance also operates strategic collaborations with automakers including Germany’s Daimler, China’s Dong Feng, and India’s Ashok Leyland and recently took a majority stake in Russia’s top automaker, AVTOVAZ.