Founded in 1999 on an initiative from Louis Schweitzer, then Renault Chairman and CEO, the Renault-Nissan Alliance celebrates its 14th birthday today. We thought it a perfect moment to review the highlights and successes of this extraordinary partnership in the automotive world. We also look at the strengths of the win-win strategy, the first of its kind between a French and Japanese company, and the major projects on the horizon, including Renault’s expansion in China and fresh developments in the agreement with Daimler.
The Alliance is a key advantage in today’s automotive industry. In 2012, we are the 4th biggest world group with 8 million cars sold and in our industry, economies of scale are crucial. The Renault-Nissan Alliance is a long term partnership that has grown year after year. In 2012, it has generated 2.6 billion euro synergies, a record to this day!
Those synergies enabled Renault to make some €1.2 billion in savings in 2012, in almost all sectors of the company. This is a real-life sum of money, verified by management control, and has a direct impact on Renault’s results.
Today, 100% of Alliance purchasing, some €67 billion, is made by our shared procurement entity RNPO. It provides Renault with a tremendous opportunity to take advantage of the volume effect contributed by Nissan, in terms of supplier negotiations and represented the biggest source of savings in 2012 for the Alliance.
Today, procurement, logistics, customs duties, IT and engine development are all pooled.
But the Alliance can't be reduced to cost cuts, it also allows for the development of our activity and sales. Like the contract signed with Danone, for the sale of 15,000 vehicles, which would probably have never happened without a global offer by Renault and Nissan.
The Alliance also helped us form strategic partnerships, as with Daimler in 2010.
Today, 3 years after signing that strategic partnership, we can already see positive results : Maubeuge delivered 14,000 Citans to Daimler in 2012 and we are aiming for 40,000 in 2013 ; demand for the K9K engines produced in Spain, and fitted on the new Mercedes A Class, is also higher than we expected.
Some 10 additional projects are under way for Renault with Daimler.
The Alliance helps Renault grow internationally: in India, a shared plant in Chennai has been an asset in launching 5 models in less than a year, including Duster, a sales success. In China, thanks to a three-party agreement signed in 2003 with Nissan and Dongfeng, Renault will be able to access the Chinese market and develop rapidly with the support of Nissan. In short, thanks to the Alliance, Renault is moving fast internationally, where the growth is to be found.
People often talk about our competitors’ common platform strategies, like those of Volkswagen. A similar system is underway at the Alliance in the shape of the Common Module Family, or CMF, whereby a maximum number of non-visible parts are pooled to take advantage of a volume effect with our suppliers. This program applies to parts and derived components fitted on a range of vehicle models and powertrains. This has been underway since 2009, starting with CMF1 on the C and D segments, followed by CMF2 on the B segment. With CMF, 1.50% of parts are shared between Renault and Nissan, initial outlay was reduced by 25% and entry ticket by 40%. First models are set to arrive in 2014.
Powertrain-wise, the engines and gearboxes sharing is well advanced, with 60% of engines being developed in common or shared, and 80% for the transmissions.
Many in France criticize the fact that the Alliance mostly benefits Nissan. Yet, as I have just outlined in this post, the relationships within the Alliance are balanced. First, no decision can be taken to the detriment of one of the partners, so it's a win-win principle. Synergies are globally well balanced and benefit both Renault and Nissan.
But beware of perceptions. They should not be accepted blindly. The latest Alliance survey shows that a majority of people at Renault think that Nissan benefits the most from the Alliance and a majority of people at Nissan think that Renault does. That proves we can improve in terms of communication and explaining what we do.
Since 1999, the Alliance has really improved. But improving isn't enough, we have to do better than our competitors, Volkswagen, Toyota, and Hyundai-Kia…
We have to go get all that potential in synergies and cooperations to make both companies more efficient. As the President reminded us during the Alliance Convention in September 2012, the Alliance has to be a driving force to maximize performance for both Renault and Nissan".