Renault Nissan alliance to step up synergies

Ten years into their alliance, Renault and Nissan are taking cooperation to a higher level. In 2009, synergies identified are expected to contribute as much as 1.5 billion euros in cash flow to the alliance partners, while a small, dedicated team has been set up to foster deeper, broader cooperation between the two companies and to maximise the contribution of synergies to the performance of both partners

‘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,’ says 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.’

Since 1999, Renault and Nissan have developed an alliance that has created significant value for the two companies. These include shared platforms and powertrains, cooperation on advanced technologies, standardisation of manufacturing methods, the expansion of the product line-ups and the extension of the global footprint of each partner. Combined vehicle sales have increased from 4.9 million units in 1999 to 6.9 million in 2008 (including Avtovaz), making Renault-Nissan the world’s third-largest automotive group.

The Renault-Nissan alliance provides a unique competitive advantage to the two companies in a sector that’s badly hit by the global economic crisis. To maximise utilisation of the knowledge gained from 10 years of cross-cultural management and shared experience, the alliance has set up a small dedicated team of six people from Nissan and five from Renault. Starting 1st June, they will apply their in-depth understanding of both companies to foster synergies at all levels and push for greater common activity and standardisation, not just in 2009 but well into the future.

This dedicated team will focus on the following areas identified as priorities: purchasing, global sourcing, common platforms and parts, powertrains, support functions, global logistics, information systems, research and advanced technologies, and zero emission business.

Both Nissan and Renault are also expected to increase their presence in India over the next 2-5 years, in a very big way. While the Mahindra Renault Logan has not met with much success in the country, Renault is likely to enhance its product portfolio and bring in other vehicles from its international line-up. These may include the Sandero hatchback as well as a crossover based on the same.

Nissan, in the meanwhile, already has a headstart with setting up its manufacturing operations in India, near Chennai, and will start making a wide range of its cars in India, starting with the all-new Micra, which is expected to be launched in 2010. Both Renault and Nissan expect India to be a high-growth market over the next 10 years.