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December 7, 2016

Alliance powertrain convergence chief for the chop – report

The Renault-Nissan alliance is reportedly replacing the top executive in charge of combining the automakers' engines and gearboxes as tightening emissions regulations expose the slow pace of integration to date.

The Renault-Nissan alliance is reportedly replacing the top executive in charge of combining the automakers' engines and gearboxes as tightening emissions regulations expose the slow pace of integration to date.

Four unnamed sources told the Reuters news agency that Alain Raposo, global head of powertrain engineering, would be moved to an advisory role and a successor announced this week.

A Renault-Nissan spokeswoman told the news agency there would be no comment on "speculation about personnel changes" from the companies or the people involved. "The alliance is on track with its overall convergence objectives, including engineering," she said.

Reuters noted that, under chief executive Carlos Ghosn, the alliance created in 1999 is still moving incrementally towards common vehicle architectures and engines with the goal of achieving EUR5.5bn (US$5.9bn) a year by 2018.

Renault diesel engines are used in many Nissan model variants while the alliance also has a separate alliance with Daimler that sees them jointly producing and sharing engines along with vehicle platform sharing and joint production at a new plant in Mexico.

According to Reuters, the two groups, with total annual sales of EUR145bn, say 85% of engines are already shared in some way. But that understates inefficiencies, executives have privately conceded – as well as the cost of protracted bickering over whose technology becomes standard.

"It's a permanent punch-up – after 17 years we are still unable to think like a single company," one of Raposo's management colleagues told Reuters. "In powertrain it's always been hell."

Expected emissions regulations following Volkswagen's exposure last year for cheating US diesel tests has made the problem more urgent, Reuters said, adding that independent studies have since blamed Renault for some of the highest real-world nitrogen oxide (NOx) emissions, piling pressure on engineering boss Gaspar Gascon Abellan and Thierry Bollore, Ghosn's second-in-command at the carmaker.

Questions over whether Renault's technology breaches EU law have been referred to prosecutors for investigation. Renault has said all its engines are legal, the report noted.

The report said weak emissions performance is increasing Renault's costs for curbing excessive on-the-road emissions from current engines and accelerating development of cleaner new ones, along with rechargeable petrol-electric hybrids.

"We're behind on several projects – some engine development schedules are all over the place," another manager told Reuters. "The tighter standards are causing real difficulties, so we're hiring and doing everything we can, but it's not enough."

In one example, Renault realised too late the next generation of petrol engines was likely to require particulate filters, previously reserved for diesels, the manager told Reuters. "We had thought we could get by without them."

The scramble reportedly has begun to affect Renault's capital expenditure – hence focusing more attention on untapped savings opportunities with Nissan.

Reuters noted that, while Renault-Nissan is set to top 10m annual vehicle sales following Nissan's acquisition of Mitsubishi Motors, rivalling the likes of Toyota and GM, the economies of scale are further behind.

An example: the two automakers have refused for years to pool three-cylinder gasoline engines or to use each other's. The current Renault Clio and Nissan Micra have similarly powered – yet separately conceived – motors and transmissions.

Another: while Nissan developed continuous variable transmission (CVT) automatic gearboxes through its subsidiary Jatco, Renault purchased more expensive dual-clutch transmissions (DCT) from Getrag, pending plans to design and produce its own.

But sources told Reuters that, suring Raposo's term, however, sources Renault recently agreed to use a Nissan three-cylinder and shelve DCT gearbox development in favour of greater use of its partner's CVT in core models, starting with the Kadjar SUV next year. Production of Nissan's next Micra, now ramping up at a Renault plant west of Paris, also includes versions with a Renault three-cylinder engine.

But, Reuters noted, these gains are too little, too late to alleviate the strains on Renault's engineering resources.

"Top management wants to go faster," another executive told the news agency which also noted Raposo is the latest in a series of alliance directors to pay the price for slow progress on technical convergence which they lack the authority to impose.

Renault owns 43.4% of its larger partner but has refrained from exercising control under Ghosn's philosophy of consensual decision-making, which hands each company an effective veto on joint investments, Reuters added.

A senior manager told the news agency the Renault and Nissan executive committees "have never been capable of converging" technologies in a timely way. "So they end up punishing the guy underneath."

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