Renault and Nissan forge deeper alliance

Tue, 18 Mar 2014

If the automotive industry's current era could be summarized by one trend – from a corporate aspect, anyway – surely it would be conglomeration. But of all the major auto groups that have emerged over the past several years, none have kept themselves at arm's length quite like the Renault-Nissan Alliance.

Much like Fiat and Chrysler, Renault and Nissan are presided over by a common chief executive. But whereas Sergio Marchionne's Italian-American alliance has moved swiftly from a transatlantic partnership to a merged company in the span of less than five years, Carlos Ghosn's Franco-Japanese alliance has stood oceans apart since 1999. But now the Renault-Nissan Alliance is following the lead set by Fiat Chrysler Automobiles in bridging that distance through several key measures.

For one, Renault and Nissan will make increased use of common platforms, R&D, systems and testing. The two automakers will also cooperate more closely on manufacturing and supply chain management, purchasing and human resources. To manage the increased cooperation, the alliance has appointed several new executive vice presidents from within its ow ranks and a new management committee to be chaired by Ghosn, details about which you can read in the press release below.

RENAULT AND NISSAN TO CONVERGE FOUR MAJOR ALLIANCE FUNCTIONS 1 APRIL

- To achieve a minimum €4.3 billion annual synergy goal, the Alliance is implementing convergence plans in four key areas: Engineering, Manufacturing & Supply Chain Management, Purchasing, and Human Resources.
- Converged business functions become official 1 April and are expected to have an immediate positive effect on operational performance.
- Newly appointed Alliance Executive Vice Presidents will take charge of increasing integration in each function.

AMSTERDAM, NETHERLANDS (March 17, 2014) – The Renault-Nissan Alliance today announced it will begin implementing convergence initiatives in four key operational areas starting 1 April, with the goal of achieving at least €4.3 billion in annualized synergies by 2016.

Management teams and the boards of Renault and Nissan finalized the convergence plans following consultations with employee representatives. 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."

Four Converged Alliance Functions with New Leaders

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, is appointed Alliance Executive Vice President, 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 Vice President for Vehicle Production Engineering, is appointed Alliance Executive Vice President, Manufacturing Engineering and Supply Chain Management.
Purchasing: Renault and Nissan have enjoyed an integrated purchasing organization 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, Managing Director of the Renault-Nissan Purchasing Organization, is appointed Alliance Executive Vice President, 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 executive vice president for Human Resources, is appointed Alliance Executive Vice President, Alliance Human Resources. In addition, Greg Kelly, Nissan Senior Vice President of the CEO Office and Global Human Resources, is appointed Alliance Executive Vice President, 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 Vice President and Managing Director for the Alliance CEO Office and Global Logistics, will become Alliance Executive Vice President for Renault-Nissan BV and the Alliance CEO Office.

Together, Stronger for 15 Years

Convergence in four key business functions is the latest step in the 15-year evolution of the Renault-Nissan Alliance, which was formed on 27 March 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.

By Noah Joseph