Renault-Nissan alliance plans to double cost savings by 2016

Renault SA and Nissan Motor Co. said they aim to double annual cost savings from their alliance within four years, while denying a Reuters report that they are reviewing their cross-shareholdings.

“We have an internal goal of 4 billion euros ($5.2 billion) in synergies in 2016,” Rachel Konrad, an alliance spokeswoman, said by e-mail. “We expect more every year.” The two plan to boost synergies from their partnership to 2.1 billion euros this year from 1.7 billion euros in 2011.

Renault is not looking at changing the corporate structure of its shareholdings with Nissan, Raluca Barb, a Renault spokeswoman, said by telephone. Renault owns 43 percent of Nissan, which in turn holds 15 percent of the French carmaker. They together sold 8.03 million units in 2011, capturing 10.7 percent of the global auto market, according to Nissan’s website.

“Renault’s ability to actually deliver on synergies and savings in the past have been somewhat hard to see,” said David Arnold, an auto analyst with Credit Suisse Group AG in London.

Nissan declined to comment on “speculations or rumors” about corporate structure, Chris Keeffe, a Yokohama-based spokesman, said by telephone. The automaker confirmed the internal goal of 4 billion euros in synergies in 2016.

The Renault-Nissan alliance was established in 1999 and the companies have the same chief executive officer, Carlos Ghosn.

Nissan and Renault share a common purchasing agency for volume synergy. The Japanese carmaker aims to reach more than 50 percent of common components with Renault, compared with the current 7 percent, Yasuhiro Yamauchi, Nissan’s senior vice president in charge of purchasing, said at a briefing in Yokohama. The executive didn’t give a timeframe to reach the target.

Nissan is expanding localized production overseas and shifting domestic output to Kyushu in southern Japan to take advantage of lower local labor cost and proximity to South Korean suppliers, Yamauchi said. This comes as the company targets lowering total costs by 5 percent each year through March 2017. 

(Bloomberg)