Renault-Nissan seeks to double savings from closer cooperation

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On Friday, the Renault-Nissan alliance pledged to double its savings by 2022 from closer integration to 10 billion euros (8.9 billion pounds), thanks in part to increasing cooperation with recently acquired Mitsubishi Motors.

Carlos Ghosn, Alliance Chairman, has promised to step up the pace of integration after Nissan took a controlling stake in Mitsubishi in 2016. The 18-year-old Renault-Nissan pairing has only recently started rolling out cars on common architectures.

The alliance stated in a statement that the combined sales volumes are anticipated to increase to approximately 14 million vehicles by 2022 from an expected 10.5 million this year, with revenue advancing by a third to $240 billion.

By that date, twelve new pure-electric models will be introduced as Renault-Nissan seeks to defend the head-start it took with the battery cars’ current generation, spearheaded by the Renault Zoe and Nissan Leaf, as more competitors enter the fray.

With around 5.27 million cars and vans delivered during the year’s first half, Renault-Nissan now holds the mantle of the biggest carmaker in the world, ahead of Toyota and Volkswagen. Parent Renault, however, has never consolidated the sales of its partially-owned Japanese affiliate into its own.

The alliance is planning to increase synergies – by boosting revenue and cutting costs – to 5.5 billion euros in 2018 from 5 billion recorded last year under existing plans.

On Friday, the companies said that by 2022, a fourth common vehicle platform would be shared across the alliance, underpinning a future generation of electric cars which, together with hybrids, are anticipated to account for 30% of group sales.

NEW ELECTRICS

Renault-Nissan will target to deliver more electric vehicles and also make greater use of manufacturing processes and shared technology.

“Without a doubt, what we have seen and acted on and executed eight years ago is becoming mainstream,” said Ghosn to reporters during a presentation in Paris.

Confirming media reports, he added that Renault would launch an electrified version of the Kwid mini-SUV in China soon.

As more models are introduced on the new platforms by Nissan, Renault, Mitsubishi and their other brands, the shared architectures will account for 70 percent of sales by 2022, with common engines installed in 75%.

The announcement made on Friday was thin on details on how to achieve closer convergence. Relations between Renault and Nissan engineering teams have sometimes been fraught, hampering savings some in areas such as transmissions and engines.

Implying that he had no immediate plans to stand aside, Ghosn stated that Convergence efforts would proceed with no drastic change to management structures. Next year, Ghosn’s current contract as Renault chief executive will expire.

“I am intending to execute on the plan as long as it makes sense,” Ghosn said.

In the coming weeks, starting with the French carmaker on October 6, more details on operational and product strategies and financial goals are anticipated when Nissan, Mitsubishi, and Renault each announce their mid-term plans.