Renault-Nissan, AvtoVAZ Create Common Purchasing Group

VIENNA – The Renault-Nissan Alliance and Lada-maker AvtoVAZ take another step in the integration of their Russian operations with the establishment of a purchasing group.

The newly created Common Purchasing Organization, or Sovmestnaya Zakupochnaya Organizatsy, is owned equally by AvtoVAZ and the Renault-Nissan Purchasing Organization (RNPO) on which it will be modeled.

“This structure will manage a defined scope of purchasing for Renault, Nissan and AvtoVAZ joint activities related to industrial equipment, powertrains and vehicles based on common platforms,” the partners say in a statement.

CPO will use the RNPO methods and standards and is expected to generate significant savings.

Daniel Perry, who previously served as vice president-Renault Nissan Purchasing Organization Eurasia Region, has been appointed CEO of the new purchasing group and will be based in Togliatti, Russia.

He will report to a governance committee composed of Christian Vandenhende, RNPO managing director; Yasuhiro Yamauchi, RNPO deputy managing director; and Damir Kashapov, AvtoVAZ vice president-purchasing.

Improving purchasing procedures and the quality of parts sourced from Russian-owned suppliers, as well as increasing parts localization in Russia, are among the main tasks of the alliance’s work at AvtoVAZ.

One of CPO’s main targets will be to attract global companies to the AvtoVAZ and Renault-Nissan Alliance supplier base.

At the same time, the partners are trying to improve the quality of existing local suppliers. Several traditional Russian parts makers have lost their business with AvtoVAZ or are afraid this will happen because of higher quality standards. Many of the companies affected are located in Samara, the automaker’s mother region.

On his visit to the city of Syzran earlier this year, Nikolay Merkushkin, governor of the Samara Region, heard local suppliers’ complaints about a decline in their business with AvtoVAZ. He also heard that the automaker’s foreign shareholders preferred Western parts makers.

“It is necessary to understand that your production has to meet all the quality requirements of the Renault-Nissan Alliance,” Merkushkin reportedly answered. “We are ready to support those local companies that supply AvtoVAZ with quality products.”

CPO, therefore, will try to push for improved quality with some Russian suppliers. In other cases, the creation of a joint venture with a foreign partner may be a possibility.

The interaction between AvtoVAZ, Renault and Nissan likely will become more intense in the future. AvtoVAZ currently is producing two models based on the Renault B0 platform that underpins the Nissan Almera sedan and Lada Largus wagon, which is the Lada version of the previous-generation Dacia Logan MCV wagon.

In addition, the Russian automaker is preparing for production of more Renault models at its plant in Togliatti. That means there soon will be more Renault, Nissan and Datsun models based on Renault-Nissan and AvtoVAZ platforms being manufactured at AvtoVAZ plants in Togliatti and Izhevsk, making the proper management of purchasing activities even more important.

AvtoVAZ also has become a significant supplier for Renault’s Moscow-based Avtoframos factory. Since September 2012, it has been producing chassis parts for the locally made Renault cars.

And in the coming weeks, AvtoVAZ will launch shipments of Russian-made 1.6L Renault gasoline engines and transmissions to Avtoframos.

“The 1.6L naturally aspirated engine that we call K4 will be used for the assembly of the Renault Logan, Sandero and Duster,” Bruno Ancelin, Renault senior vice president-Eurasia Region and managing director-Russia, tells WardsAuto. Most of the engines will be installed in the Duster.

“Up to now, we had absolutely no problems regarding quality or supply,” Ancelin says when asked about his experience with AvtoVAZ-made chassis parts. “We are very satisfied, and everything is going well. If it continues like that in the case of the engine and the gearbox, it is a very good deal.”