Alliance Synergies Boost Savings 54% at Renault-Nissan

Renault SA and Nissan Motor Co. report that cost savings from their alliance reached a record €2.7 billion ($3.5 billion) in 2012 compared with €1.8 billion ($2.3 billion) the previous year.

Cost reductions included purchasing ($1.1 billion), powertrain ($925 million) and vehicle engineering ($712 million), according to the partners. The tally of savings includes only new synergies, not cumulative reductions.

The companies predict savings from synergies will increase as they produce more vehicles at shared plants in such emerging markets as Brazil, China, India and Russia.

Renault-Nissan also announced last week that they are launching a modular vehicle manufacturing strategy that will reduce product development costs 30%-40% by 2020. The companies say they will share about half their components by that time, thus reducing parts expenses by 20%-30%.

The partners will begin rolling out vehicles this autumn that were developed under the modular system.