Renault-Nissan names new alliance team to step up integration

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PARIS -- Renault and alliance partner Nissan detailed plans to combine key operations under a new team of managers to pursue greater economies of scale.

Japanese executives from Nissan will take core new engineering and manufacturing leadership roles under the plans while Renault executives will head purchasing and human resources for the alliance.

In January, Renault and Nissan had said they will accelerate integration between the two carmakers. Since then management teams and the Renault and Nissan boards finalized convergence plans following consultations with employee representatives, Renault said on Monday in a statement.

The plans are the deepest moves to integrate the two companies in their 15 year-old alliance. Renault-Nissan CEO Carlos Ghosn said the car brands would remain separate and a full merger would be problematic. "I am trying to create the minimum change for the maximum performance," Ghosn said.

Renault said the alliance will implement greater integration in four key areas starting April 1: Engineering, manufacturing/supply chain management, purchasing, and human resources.

"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," Carlos Ghosn said in the statement. "The synergies will then enable us to deliver higher-value vehicles to customers and stay at the leading edge of innovation."

The alliance aims to achieve 4.3 billion euros ($6 billion) in annualized synergies by 2016.

Tsuyoshi Yamaguchi will become head of alliance technology development with responsibility for research and development in engines and vehicles, including future electric cars, and for the alliance's Common Module Family architecture. He currently is head of platforms and parts for the alliance.

Shohei Kimura is appointed head of manufacturing engineering and supply chain management. He will be responsible for converged manufacturing functions, global industrial strategy including sourcing, production process engineering, as well as production control and supply chain management. Kimura is currently Nissan's head of vehicle production engineering.

Christian Vandenhende will head purchasing for the alliance. Vandenhende is currently head of the Renault-Nissan Purchasing Organization. "Convergence of major engineering and manufacturing activities will drive greater purchasing synergies and more economies of scale," Renault said.

Marie-Francoise Damesin will head human resources for the alliance, tasked with creating a unified "talent management" policy across the companies' global operations. Damesin is currently head of personnel at Renault. In addition, Greg Kelly, Nissan's head of global human resources, gets the role of head of Alliance Talent Management.

The shake-up will lead to more lower-level appointments, people with knowledge of the matter said today, including a new Renault China boss brought in from Nissan. Nissan is already a strong player in China, the world's biggest auto market, while Renault has yet to begin production with their joint venture partner Dongfeng Motor Group.

Cultural sensitivities

Ghosn is stepping up integration between the French and Japanese carmakers after many years of cautious cooperation. Previously he argued that cultural sensitivities prevented faster integration. As a result, analysts and insiders say, the alliance has missed significant savings opportunities as Nissan and Renault went their separate ways on programs such as electric cars and light commercial vehicles.

Renault and Nissan lag behind Volkswagen, Hyundai-Kia and Toyota on platform scale - the number of vehicles assembled from a common architecture. The alliance is rolling out new models on its jointly developed Common Module Family architecture for midsized vehicles.

They have also stepped up cooperation in low-cost vehicles. A range of no-frills cars is in joint development in India, and the carmakers are taking joint control this year of Russia's AvtoVAZ, producing models based on Renault's Logan sedan at its Togliatti plant.

'Married couple'

Investors will view the new measures positively, London-based Barclays analyst Kristina Church said. "Especially as we're finally starting to see the(savings) numbers drop down to the bottom line," she said.

Takaki Nakanishi, an autos industry analyst at Nakanishi Research Institute, said the integration steps are necessary but are likely to be more difficult and take longer to implement than joint development of vehicle architectures.

"Renault and Nissan are like a married couple after 15 years," he said. "They are each doing their own thing inside the house but they cannot survive if they separate."

The Renault-Nissan alliance is a rare case of an equity partnership led by a single CEO that has proved successful over the long term.

Renault holds a 43.4 percent stake in Nissan, having rescued the Japanese automaker from near-bankruptcy in 1999.

Nissan, which now holds 15 percent of Renault, has since boosted its sales and profit sharply while its French partner has struggled, and it now sells twice as many vehicles as Renault.

Reuters contributed to this report

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