Renault-Nissan-MMC Alliance on path to €8bn annual cost savings boost

Following today’s news that the members of the Renault-Nissan-Mitsubishi Alliance have agreed a new and deeper ‘cooperation business model’;

David Leggett, Automotive Analyst at GlobalData, a leading data and analytics company, offers his view:

“The Alliance has delivered substantial benefits to its participants over many years in engineering savings, supply-chain leverage and scale economies. GlobalData estimates annual cost savings and synergistic benefits have been in excess of €5bn – shared mainly between Renault and Nissan.

“With the 2017 addition of Mitsubishi to the club and this ramp-up to cooperation and integration, the Alliance is on course to grow that total to €8bn when the industry returns to normal volumes over the next three years.

“This reset to the business plan ramps up integration and will lead to more sharing of technologies, more shared parts procurement and use of common components. It will also contribute to increased efficiency of Alliance companies’ manufacturing operations across the world.

“Renault, Nissan and Mitsubishi all face long-term sector-wide pressures, especially rising investment commitments in costly advanced technologies such as electrification. More immediately they face the financial stresses caused by the COVID-19 pandemic and decimated global vehicle markets.

“Unsurprisingly, they have grasped the opportunity to double down on the kinds of cost-sharing, cost avoidance and synergies in engineering and manufacturing the Alliance can facilitate.

“The key now is execution and, of course, the global vehicle market recovering from this current crisis and heavily depleted markets.”

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