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Renault-Nissan Alliance reports €5 billion gain in operational synergies

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The Renault-Nissan Alliance has reported that its business convergence plan, which began in 2009, brought it €5 billion ($5.7 billion) in annualised synergies last year, up on the €4.3 billion recorded in 2015.

Alliance companies continue to deepen ties across engineering, manufacturing and supply chain management, purchasing and human resources. Renault Nissan said converged operations in purchasing, engineering and manufacturing had contributed most to the €700m gained last year.

The Alliance is forecasting its gains will continue next year and is targeting synergies of €5.5 billion. That figure does not take into account the contribution from Mitsubishi, in which the Alliance bought a 34% stake last year for $2.3 billion.

“The growing cooperation is delivering strong benefits for the members of the Alliance, reflected by the economies of scale, technological breakthroughs and innovations that are being shared between Renault and Nissan,” said Carlos Ghosn, chairman and CEO of the Renault-Nissan Alliance. “We are on track to realise synergies of €5.5 billion in 2018, even before taking into account the contributions from Mitsubishi Motors, our new Alliance partner.”

The company said that with the addition of Mitsubishi, it expected to generate additional synergies from joint purchasing and logistics, as well as through more localisation, shared plant use, common vehicle platforms and technology sharing.

Synergy gains are being achieved by the Alliance companies by making vehicles at each others’ plants and closer to where they are sold.

This year, Renault and Nissan said the Alliance would increase sharing across platforms, powertrain and parts.

It established a light commercial vehicle unit in April this year to share product development and cross-manufacturing, as well as technology. This builds on several years of van cross-production between Renault and Nissan, including the Nissan NV300 van, which is built on the Renault Trafic platform, and the Nissan NV400 van, which is built on the Renault Master platform.

Nissan will also begin production of the Renault Alaskan pick-up truck at its Barcelona plant in Spain later this year.