PARIS — Renault SA and Nissan Motor Co. Ltd. plan to save FF2.9 billion (US$465 million) from purchasing efficiencies next year, mostly among Nissan's European suppliers.

Nissan in Europe buys from some of the same suppliers as Renault,” says Renault President Louis Schweitzer at Renault's annual meeting in June. “This makes rapid synergies possible.”

In a letter to stockholders distributed at the meeting, Schweitzer says a Renault study of Nissan purchasing revealed “a high level of additional expenditure.”

Renault and Nissan will start buying parts together, even though they will have separate organizations.

Nissan already has begun uniting all purchasing for production and non-production items in a single organization.

Purchasing will give the early synergy savings, but combined development and, ultimately, common platforms will bring the big rewards.

Renault currently has eight platforms with an average of 280,000 vehicles made from each. Nissan has 26 platforms, averaging 108,000 units each. Their goal is 10 common platforms, averaging 500,000 units each.

“The resulting profits will be considerable,” Schweitzer says.

The first one, due in 2003, is a platform for the next Renault Clio and Nissan Micra.

Synergy savings at Renault and Nissan
(in millions US dollars)
Year * Purchasing Other Total
2000 465.5 80.1 545.7
2001 577.8 561.8 1,139.6
2002 642.0 882.8 1,524.8
* Projections for savings
Source: Renault

It will be one of the two highest-volume platforms of the group in what in Europe is the super-mini segment.

Nissan President Yoshikawa Hanawa, who was voted onto the Renault board of directors at the meeting, addressed stockholders with a short speech in French.

“The responsibility of Nissan is to contribute to the profits of Renault as quickly as possible,” he said. He was warmly applauded.

Renault spent US$5.3 billion for 36.8% of Nissan at the end of May. Three former Renault executives joined Nissan's top ranks last month, at Nissan's annual meeting in Tokyo.

In a letter to stockholders, Schweitzer says the alliance between the companies will generate savings of at least US$3.1 billion in the first three years and up to 3% of revenues by 2005, when the common platform strategy is under way.

The 10-member Global Alliance Committee held its first meeting last month, as the Nissan-Renault alliance started taking form.

It will have five members from each company, with two of Nissan's representatives being former Renault employees Carlos Ghosn and Patrick Pelata.

Schweitzer says Ghosn, now Nissan's chief operating officer, will deliver the broad outline of his recovery plans for Nissan this month and announce details of the strategy at the Tokyo auto show in October.