Nissan Motor and Renault will take their alliance a step further by pooling their manufacturing facilities and bringing production and development departments under joint operations management, Japan’s Nikkei business daily reported on Friday (24 January, 2014).
The report said the two automakers hope to cut over JPY400bn (US$3.78bn) in annual costs by adapting quickly to shifts in global demand and exchange rates. They will appoint a manager to oversee both comapnies’ production departments as early as April, and a similar organisation structure will be put in place for development.
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According to the Nikkei, Nissan currently owns 25 factories worldwide and Renault has 20. Combined with affiliate AvtoVAZ, they sold a combined 8.1m vehicles worldwide in 2012.
By using common parts, Nissan and Renault will be able to manufacture cars with different designs on the same assembly lines. The mixed-model line will make car production by both automakers more flexible than the current arrangement which involves only partial sharing at some plants.
They plan to adopt this manufacturing method as early as 2015 at a joint venture factory in India rolling out 400,000 vehicles a year, then bring the mixed-model approach to more than 10 countries by 2020, the Nikkei said. AvtoVAZ will likely be included as well.
Under this system, the Nikkei said, factories with low operating rates would be able to produce models from other brands. Until now, a plant set up in a new market would not turn a profit unless it assembled at least 100,000 cars a year. Joint production would make expansion easier.
Renault and Nissan complement each other geographically – Renault owns plants in Europe and the Middle East while Nissan has a strong presence in North America and China.
The partners will reorganise their research and development departments to address overlap in these areas, the Nikkei said. They aim to boost their R&D capabilities by sharing knowledge and combining work on leading technologies such as fuel cell vehicles, electric vehicles and self-driving cars.
Nissan and Renault entered into a capital and business alliance in 1999 and, in areas such as purchasing, have since achieved savings worth EUR2.69bn ($3.64bn) in 2012. They aim to cut costs even more by integrating production and development on a global scale.
The alliance has also expanded with moves such as jointly purchasing AvtoVAZ and forming a capital tie with Daimler. But it faces a number of issues, including the European economic crisis, which has eaten into Renault’s earnings, as well as strain from Nissan’s rapid global expansion.
As Toyota Motor and Volkswagen increase their sales volume and earnings, Renault and Nissan hope that a further operational integration will create economies of scale, helping them mount a comeback, the Nikkei said.
