A new joint purchasing company, equally owned by AvtoVAZ and the Renault-Nissan Purchasing Organisation (RNPO), has been established in Russia and is expected to increase the supply of locally-sourced parts and attract global companies to the Russian supplier base of the three companies.

The company, known as Common Purchasing Organisation LLC (CPO) is modelled on RNPO which was the first major fruit of the alliance when it was formed in 2001.

RNPO is Renault-Nissan’s largest common organisation and biggest contributor to savings based on cost reductions and cost avoidance. Last year, RNPO was responsible for about EUR851m (US$1.1bn) in savings, about one-third of the total for the alliance.

CPO, which will be headed by Daniel Perry and based in Togliatti, will manage joint activities related to industrial equipment, powertrains and vehicles based on common platforms. Increased volumes and better pricing are expected to lead to considerable savings while CPO will also be responsible for dealing with suppliers on quality, costs and delivery deadlines, as well as developing relations with suppliers in order to increase parts localisation in Russia and upgrade the technology and quality of Russian suppliers.

Renault took a 25% stake in AVTOVAZ in 2008 and the alliance is expected to take full control next year after it has finalised a joint venture with the state-owned defence group Russian Technologies. Under plans outlined at the end of last year, Renault-Nissan will take a 67.1% stake in the joint venture which in turn will own 74.5% of AVTOVAZ.