Renault-Nissan Alliance annual synergies rise 16% to €5bn

The Renault-Nissan Alliance reported a 16 percent increase in synergies for 2016 compared to 2015.

The Alliance members secured savings, generated incremental revenues and implemented cost-avoidance measures through the world’s leading automotive partnership.

The value of annualized synergies realized by the Alliance rose to €5 billion last year, up from €4.3 billion in 2015. Converged operations in purchasing, engineering and manufacturing contributed most of the €700 million synergy improvement.

“The growing cooperation across the Alliance is delivering strong benefits for the members of the Alliance, reflected by the economies of scale, technological breakthroughs and innovations that are being shared between Renault and Nissan,” said Carlos Ghosn, chairman and chief executive officer of the Renault-Nissan Alliance. “We are on track to realize synergies of €5.5 billion in 2018, even before taking into account the contributions from Mitsubishi Motors, our new Alliance partner.”

With the addition of Mitsubishi Motors, which became the third full member of the Alliance at the end of 2016, annual sales have reached 10 million units. The addition of Mitsubishi Motors comes two years after Renault and Nissan deepened their partnership by converging four key functions: Engineering, Manufacturing & Supply Chain Management, Purchasing and Human Resources. Each such functions is led by a common Alliance Executive Vice President.

“We continue seeing tangible results of this major convergence,” added Ghosn. “Our growing synergies are helping Renault, Nissan and now Mitsubishi Motors meet their financial objectives and deliver higher-value vehicles to customers in the new era of mobility.”

In the current year, the Alliance members are expected to introduce more next-generation technologies in electric vehicles, autonomous driving and connected cars and will increase commonalities in platforms, powertrain and parts to boost competitiveness and identify new synergies.

In April 2017, the Alliance created a light commercial vehicle business unit that will deliver additional synergies in vans and light trucks. The new unit will maximize shared product development and cross-manufacturing, technology sharing and cost-reduction, while preserving brand differentiation among Alliance members.