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Nissan, Renault cut costs with combined engineering

19 Mar 2014  | Christoph Hammerschmidt

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Japanese carmaker Nissan and its French alliance partner Renault are set to merge a range of engineering and other activities, which include the development of certain electronics modules and electric powertrains. The companies believe that the move will result in cost reduction of up to $5.89 billion.

According to the plan, Renault and Nissan will combine Common Module Family engineering, advanced research activities, development of powertrains and testing facilities. The joint activities in powertrain development will include—and most likely in the future be focused on—electric powertrains.

The companies will also converge major aspects of their manufacturing activities, such as production process engineering, production control and supply chain management and global industry strategy, whereas the latter one includes sourcing. For more than a decade, Nissan and Renault are running a joint purchasing organisation. Nevertheless, the convergence of activities as large as engineering and manufacturing will drive greater purchasing synergies and more economies of scale, the companies said.

In addition, the alliance partners will also combine their HR activities in that they will establish common HR processes across both companies. This includes a unified talent management policy.

To assist with the development of deployment of the new organisational structure, a new Management Committee Alliance will be established, headed by Renault-Nissan Chairman and CEO Carlos Ghosn. The implementation of the new structures will start as early as April.

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