Renault-Nissan makes massive savings across both companies in 2013.

• Purchasing, powertrain and vehicle engineering areas remain the biggest contributors to synergies
• “Non-traditional” business functions, such as sales and marketing, increase contributions
• Moving forward, synergies are expected to accelerate with “convergence” in four key business functions

The Renault-Nissan Alliance posted record synergies of 2.87 billion euros in 2013, up from 2.69 billion euros in the previous year. Purchasing, powertrain and vehicle engineering remained the biggest contributors as the Alliance geared up for the launch of its first Common Module Family (CMF) vehicles.

Purchasing, which is jointly managed by Renault-Nissan Purchasing Organization (RNPO), generated 1.036 billion euros in synergies. Vehicle engineering, which relates to common platforms and components, accounted for 714 million euros. The co-development and exchange of powertrains accounted for 525 million euros.

Synergies are derived from cost reductions, cost avoidance and revenue increases. Only new synergies – not cumulative synergies – are taken into account each year. Synergies help both Renault and Nissan meet performance objectives and, significantly, enable the carmakers to deliver higher value vehicles to customers around the world.

CMF and emerging markets drive synergies

Common Module Family (CMF) is the Alliance’s unique system of modular architecture and an increasing source of synergies.

CMF enables Renault and Nissan to build a wide range of vehicles from a smaller pool of parts, while at the same time increasing customer choice and quality. Small vehicles are based on CMF-A, while mid-sized vehicles are CMF-B, and the largest vehicles are CMF-C/D.

In November 2013, Nissan began selling its first vehicle on CMF in the United States; the new Rogue sports utility vehicle is built on CMF-C/D. The following month, Nissan began selling the X-Trail crossover SUV in Japan, also based on CMF-C/D. In February, Nissan began selling the Qashqai crossover in Europe.

The first model based on CMF at Renault will be the replacement for the Espace, which will debut in 2015 on CMF-C/D.

In 2013, the Alliance also began development work on CMF-A, the most affordable category of cars. Production of CMF-A vehicles will begin in 2015 at the Renault-Nissan Alliance plant in Chennai, India.

“Development of CMF vehicles is helping to drive synergies in all our major business areas – from purchasing to vehicle engineering and powertrains,” said Christian Mardrus, Alliance Executive Vice President for Renault-Nissan B.V. and the Alliance CEO Office. “CMF will continue to be a major driver of our synergies in the future with 70% of our vehicles expected to fall within the CMF scope by 2020.”

The Alliance also generated synergies in emerging markets, such as India and Russia, where Renault and Nissan manufacture vehicles together at the same plants. Last year, Renault began sales of the Duster sports utility vehicle in the UK and South Africa. The right-hand drive vehicles are produced at Renault-Nissan Automotive India Private Limited in Oragadam, India, near Chennai. The plant, which has a capacity of 400,000 vehicles per year, splits production between Renault and Nissan vehicles.

Also last year Nissan began sales of the Almera sedan, which is built in Togliatti, a manufacturing complex shared with partners Renault and AVTOVAZ, Russia’s largest automaker.

Contribution from non-traditional areas and convergence

The Alliance is also increasingly benefitting from synergies in non-traditional areas, such as sales and marketing. In 2013, the Alliance signed two major global fleet contracts with pharmaceutical giant Merck and global information technology services group Atos.

“Thanks to our partnership, we are able to offer customers an extensive range of vehicles around the world – from Dacia to Infiniti,” said Mardrus.

Moving forward, the Alliance’s focus on “convergence” is expected to increase synergies in four key business functions: Engineering, Manufacturing & Supply Chain Management, Purchasing, and Human Resources.

While Renault and Nissan remain separate companies, these four business functions were converged on April 1, each led by a newly appointed Alliance Executive Vice President. As a result of the convergence, the Alliance expects to achieve at least €4.3 billion in annualized synergies by 2016, up from 1.5 billion euros in 2009 when the Alliance first began recording synergies.

ABOUT THE RENAULT-NISSAN ALLIANCE:

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 8.3 million cars in nearly 200 countries in 2013. The Alliance also operates strategic collaborations with automakers including Germany’s Daimler, China’s Dongfeng, and India’s Ashok Leyland and recently took a majority stake in Russia’s top automaker, AVTOVAZ.