Renault-Nissan report record £2.3 billion made in 2013

The Renault-Nissan Alliance have reported that the company coalition raked in a record £2.3 billion in synergies last year.
This is an increase over the £2.1 billion that the merged companies made the previous year and has been attributed to increases in purchasing, as well as in new powertrain and vehicle engineering.

Just under half of the record synergies made was as a result of purchasing, jointly managed by the Renault-Nissan Purchasing Organisation, while the engineering of common platforms and components to be shared between the companies accounted for much of the rest.

Synergies are a result of the combined efforts of two companies that form an alliance, the result meaning that both the companies can generate higher productivity and efficiency from shared assets and then reap the rewards jointly through brand extensions and cross-selling to customers of both businesses.

The Common Module Family System

The companies claim that their new shared approach to engineering, dubbed the Common Module Family system, will drive their successes even higher in the future.

CMF aims to allow Renault and Nissan to build a wider range of vehicles from a smaller pool of parts while increasing customer choice and quality by sharing the work. The approach is split into three levels: CMF-A for small vehicles, CMF-B for mid-sized cars and then CMF-C/D for the largest products.

Christian Mardrus, Alliance Executive Vice President for Renault-Nissan B.V. and the Alliance CEO Office, said: “Development of CMF vehicles is helping to drive synergies in all our major business areas, from purchasing to vehicle engineering and powertrains. 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 first CMF-produced vehicle

Nissan began trialling its first CMF-produced vehicle in the US market in November of last year, the Rogue SUV, before using the system to introduce the X-Trail crossover to Japan, and the Qashqai in Europe.

Renault’s first CMF-based model is due to be the replacement for the Espace, which will have its debut next year. More vehicles are to be introduced in the coming months as well, as Renault-Nissan plan to build cars for markets in India, South Africa and Russia, among others.

In addition, the two companies are also benefitting from synergies in non-traditional areas including sales and marketing and the Alliance signed two major global fleet contracts with pharmaceutical giant Merck and computer services group Atos.

The focus on convergence is also expected to increase synergies in four key areas including engineering, manufacturing and supply chain management, purchasing, and human resources, which were merged in early April.

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.