Renault, Nissan gun for €4.3 billion savings with operational synergies

The Renault-Nissan Alliance has announced it will begin implementing convergence initiatives in four key operational areas starting April 1, with the goal of achieving at least €4.3 billion (Rs 36,545 crore) in annualised synergies by 2016. The Alliance initially launched convergence study projects in late January in four key areas: Engineering, Manufacturing & Supply Chain Management, Purchasing, and Human Resources. 

Under the plan, these 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.

“Convergence within these four key business functions will result in an immediate increase in efficiency and leverage our size to achieve competitive economies of scale,” said Renault-Nissan chairman and CEO Carlos Ghosn. “The synergies will then enable us to deliver higher-value vehicles to customers and stay at the leading edge of innovation.”

Engineering: Renault and Nissan will combine Common Module Family engineering, advanced research, powertrain development (including electric vehicles), systems engineering and testing facilities and services. Tsuyoshi Yamaguchi, Alliance director of platforms and parts, has been appointed Alliance EVP, Alliance Technology Development, for the new converged Alliance function.

Manufacturing Engineering & Supply Chain Management: The new Alliance converged manufacturing function will cover global industrial strategy (including sourcing), production process engineering, production control and supply chain management.  Shohei Kimura, Nissan corporate VP for Vehicle Production Engineering, has been appointed Alliance EVP, Manufacturing Engineering and Supply Chain Management.

Purchasing:  Renault and Nissan have enjoyed an integrated purchasing organisation for more than a decade. But convergence of major engineering and manufacturing activities will drive greater purchasing synergies and more economies of scale. Christian Vandenhende, MD of the Renault-Nissan Purchasing Organization, has been appointed Alliance EVP, Alliance Purchasing.

Human Resources:  Renault and Nissan teams will implement common HR processes throughout the Alliance, including the creation of a unified ‘talent management’ policy across the companies’ global operations. Marie-Francoise Damesin, Renault EVP for Human Resources, has been appointed Alliance EVP, Alliance Human Resources. In addition, Greg Kelly, Nissan senior VP of the CEO Office and Global Human Resources, has been appointed Alliance EVP, Alliance Talent Management.

To assist with the deployment and ongoing development of the new organizational structure, a new management committee Alliance will be established, headed by Carlos Ghosn. In addition, Christian Mardrus, senior VP and MD for the Alliance CEO Office and Global Logistics, will become Alliance EVP for Renault-Nissan BV and the Alliance CEO Office.

Convergence in four key business functions is the latest step in the 15-year evolution of the Renault-Nissan Alliance, which was formed on March 27, 1999. Since then, the Alliance has become the longest lasting and most productive cross-cultural collaboration in the auto industry. The companies have already integrated several functions, including information technology, logistics, customs and trade, and purchasing.

The Alliance has expanded significantly since its founding and now ranks among the world’s four largest automotive groups by sales volume. The Alliance has partnerships and joint ventures with Daimler, Mitsubishi, AvtoVAZ, Ashok Leyland and Dongfeng.