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Buoyed by 54% increase in money saved mainly through cost reductions and cost avoidance at 2.69 billion euros in 2012 through their partnership, Renault Nissan alliance today said it is expecting to increase it further, particularly in emerging markets, including India.
The Franco Japanese auto alliance said its synergies -- the sum saved mainly through cost reductions and cost avoidance stood at 1.75 billion euros in 2011.
"Synergies and greater economies of scale allow Renault and Nissan to compete in an elite tier of the world's top automakers globally. We expect to generate even more synergies going forward, particularly in emerging markets such as Brazil, Russia, India and China," Christian Mardrus, Renault-Nissan Alliance Managing Director for Logistics and the Office of the CEO, said in a statement.
Elaborating the concept of synergies, an alliance spokesperson said by purchasing together, Renault and Nissan are able to negotiate lower prices for materials and services thus resulting in cost reduction.
"By sharing platforms, each partner is able to limit its investment in the development and production of its own platform. This is an example of a cost avoidance. Our Chennai plant in India is home to our biggest platform-sharing activities in the world," the spokesperson said.
The Chennai plant of the alliance has an annual production capacity of 4,00,000 units and produces both Renault and Nissan vehicles for export and the local market.
Renault-Nissan collaboration increased worldwide, particularly in emerging markets where both companies are expanding their industrial footprints.
Elaborating on the top contributors to synergies by business unit in 2012, the alliance said purchasing topped with 851 million euros, followed by powertrain at 709 million euros and vehicle engineering with 546 million euros.
"Synergies increasingly come from Asia and emerging markets such as Russia, where the two manufacture vehicles and powertrains together at the same plants," it said.
In Russia, the alliance builds cars together with AVTOVAZ, Russia's largest automaker, at the same facility in Togliatti. Last year, the alliance had gained a controlling interest in the maker of the LADA brand through a joint venture with state-owned Russian Technologies.
In South Korea, Nissan will start making next-generation crossover vehicle Rogue at the Renault Samsung Busan plant next year.
Since 2009, all purchasing at the alliance has been handled by the Renault Nissan Purchasing Organisation the largest common alliance organisation, negotiate better pricing than small companies could negotiate individually.
