The Renault-Nissan Alliance posted record synergies of €3.80 billion ($4.14 billion) in 2014, up from €2.87 billion ($3.1 billion) the previous year, with the biggest contributions coming from purchasing, engineering and manufacturing.

The launch of the Alliance’s first Common Module Family (CMF) vehicles, as well as the recent convergence of four key units, helped drive synergies in all three areas.  

Synergies are generated from cost reductions, cost avoidance and revenue increases. Only new synergies (not cumulative) are taken into account each year. Accounting for synergies helps Renault and Nissan determine if they are meeting their performance objectives. More significantly, the net savings and revenue enhancements enable both automakers to offer higher-value vehicles to customers around the world.

“Our Common Module Family system continues to drive synergies in all major areas, from purchasing to vehicle engineering and powertrains,” said Carlos Ghosn, chairman and CEO of the Renault-Nissan Alliance. “At the same time, the recent convergence of four key functions at Renault and Nissan -- Engineering, Manufacturing Engineering & Supply Chain Management, Purchasing and Human Resources -- is accelerating the momentum.”

Renault and Nissan converged the four functions on April 1, 2014. While Renault and Nissan remain separate companies, each function is led by a common Alliance executive vice president.

Thanks to the convergence, the Alliance expects to overachieve on its goal of generating €4.3 billion in annualized synergies by 2016, s up from €1.5 billion in 2009. – TradeArabia News Service