Renault-Nissan Alliance Celebrates 14th Anniversary

An alliance established in 1999 between the French car maker Renault and Japanese auto major Nissan is now celebrating its 14th anniversary in March, 2013. The Renault-Nissan alliance has been developed over the years with respect for the cultures and identities of each of the two groups. This has enabled it to become the longest-running transnational partnership between major carmakers in the automotive industry. The Alliance gives a crucial competitive advantage to each company and to Renault in particular.

Thanks to the Alliance, Renault has gained the scale and critical mass of a major international carmaker in a globalized and ultra-competitive automotive industry. Despite the recession in Europe and slowing sales in China, global sales rose to the record level of 8.1 million vehicles (8,097,197 units) in 2012. The Renault group sold 2,550,286 units worldwide, Nissan sold 4,940,133 vehicles and AVTOVAZ 606,778 vehicles. This represents 10% of all new cars sold across the world. In 2012, the Alliance was the world’s fourth-ranking carmaker in terms of sales, behind Toyota, General Motors and Volkswagen.

This critical mass has accelerated Renault’s international development. In 1999, Brazil, Russia, India and China (the “BRIC” countries) represented only 8% of the global car market. In 2012, these four countries represented 36% of global vehicle sales. The Alliance’s strategy is to step up Renault and Nissan’s production and sales in the BRIC. The tactics are different in each region, according to the pre- existing presence of Renault or Nissan and the opportunities for partnerships with carmakers like AVTOVAZ in Russia and Dongfeng in China. India is the Alliance’s most ambitious shared platform project.

The Chennai plant, inaugurated in March 2010, is the first Alliance-dedicated plant and will enable Renault to produce locally and penetrate the Indian market. Renault already launched 5 vehicles in 17 months (Fluence and Koleos in 2011, Pulse, Duster and Scala in 2012). Therefore, Renault and Nissan are aiming for a 10% market share in India in 2016, Renault is aiming for a 5%.

In Russia, the AVTOVAZ partnership enables Renault to continue growing in the market. The new “B0” production line that went into operation in April 2012 at the Togliatti plant is used to manufacture Renault, Nissan and LADA vehicles. It doubles the Renault group’s production capacity in Russia. Renault and Nissan, with their partner AVTOVAZ, are aiming for a 40% market share in 2016, Renault for an 8% market share. In China, Renault will work with Dongfeng, Nissan’s Chinese partner for over 10 years, to set up a plant by 2016.

The different traditional home markets of the two groups are also complementary and make the Alliance stronger by spreading the risk geographically. For several years, Renault has had to cope with declining car sales in its traditional home market of Europe. For several years, Nissan has benefited from strong growth in the Chinese car market and the recovery in the U.S. car market. As a result of its 43.4% stake in Nissan, Renault benefits from the growth in Nissan’s markets. When Nissan sells a car, 43.4% of the revenue goes to Renault.

It has also enabled Renault to benefit from economies of scale by capitalizing on additional synergies each year in purchasing, engineering, powertrains, logistics, RCI Banque, and other areas... an estimated €2.6 billion in synergies in 2012, including €1.16 billion for Renault. RNPO (Renault-Nissan Purchasing Organization), the Group’s largest joint venture, is now responsible for all Alliance purchasing. It negotiates prices with suppliers for both Renault and Nissan. Since 2009, 100% of purchases have been pooled, compared with 30% in 2001, when RNPO was created. Shared platforms and components contribute to economies of scale and reduce development and production costs, as well as synergies in engines and gearboxes. 

Read More on : Renault Duster