Renault-Nissan alliance saved EUR2.69 billion in 2012

Article by Anita Panait, on June 28, 2013

Partners Renault and Nissan Motor Co. saved a total of EUR2.69 billion ($3.5 billion) in 2012 as a result of their continuing alliance on purchasing, manufacturing and design, the carmakers disclosed in a joint statement. The amount saved in 2012 is around 54-percent higher than the savings in 2011, which was pegged at EUR1.75 billion.

Renault and Nissan have been sales and manufacturing partners since 1999. Christian Mardrus, managing director for logistics for the Renault-Nissan alliance, said in the statement that synergies and greater economies of scale allow the French and Japanese companies to compete in "an elite tier of the world's top automakers."

He said that the partners expect to generate "even more synergies going forward," particularly in emerging markets like Brazil, Russia, India and China. Global carmakers are under pressure to reduce their costs as they penetrate emerging markets to trim their dependence on local markets with slower growth.

Renault recently announced that it is introducing a modular-production strategy with Nissan to produce more vehicles together.
According to Jean-Michel Billig, executive vice president of engineering and quality at Renault, the common module family technology will help the partners reduce engineering and process costs by 30 percent to 40 percent as well as cut spending on parts by 20 percent to 30 percent by 2020.

The common module family technology entails suppliers providing larger components made of smaller parts that were before installed separately.

The carmakers will introduce the technology on production of their compact and larger models in 2013 and 2014. The program will be implemented to production of their subcompacts in 2015 and their city cars in 2016. Billig said that through the new program, Renault and Nissan vehicles will share about 50 percent of parts by 2020.

The Renault-Nissan alliance is a strategic partnership between Renault and Nissan (including their respective subsidiaries). The alliance has made it clear that their unique partnership is neither a merger nor an acquisition, as Renault and Nissan are joined through a cross-sharing agreement.

The 1990s was marked a rapid consolidation between various companies. Several high-profile companies merged or were acquired, including the one that involved German carmaker Daimler and US carmaker Chrysler in 1998.

As for Renault and Nissan, their strategic alliance was officially commenced in March 1999. When the alliance was formed, Renault acquired 36.8 percent of Nissan's outstanding stock. On the other hand, Nissan pledged to acquire shares in Renault when it becomes financially able. In 2001, Nissan made true of its promise and purchased a 15 percent stake in Renault. Renault, on the other hand hike its stake in the Japanese carmaker to 44.4 percent.

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