Closer Working to Yield Renault, Nissan Extra $6 Billion in Savings

PARIS—Sharing functions to save costs will produce an estimated €5.5 billion ($6 billion) in synergies by 2018, Renault SA and Nissan Motor Co said, as the two car makers vowed to deepen ties.

Last year, the two companies, which work together under the Renault-Nissan Alliance, netted a total of €4 billion in internal savings as they shared engineering, purchasing, human resources and supply chain management functions. Now, the Alliance hopes to "partly converge" the two companies' quality and costing departments. It will also look to "increase synergies" in several other departments, including sales and marketing, product planning and after sales services.

As global car makers fight for market share and expand globally to wring growth from all corners of the world, Renault and Nissan, which have been in an alliance since 1999, have followed the more unusual path of increasing collaboration but still maintaining separate corporate and brand identities without completely merging the two companies.

Renault owns 43.4% in Nissan, while the Japanese firm owns 15% of Renault.

However, this unconventional union was shaken last year as Nissan bristled against the increasing influence of the French state at Renault. The rift was resolved at least in part in December when the two companies and the French government signed an accord in which Nissan was given the right to increase its stake in Renault if it deemed that the French government was intervening too much in its affairs.

Despite the rift, the two companies have made strides in collaborating in recent years. Several factories in European now churn out both Renault and Nissan-branded cars off the same assembly line. The two companies also now share a research and capital expenditure fund of €10 billion.

"The auto industry is rapidly evolving, requiring Renault and Nissan to leverage the Alliance as a pragmatic business tool," said Carlos Ghosn, chief executive of both car makers.

"The road ahead is one of more convergence, working more closely together."

Write to Jason Chow at jason.chow@wsj.com

(END) Dow Jones Newswires

March 04, 2016 08:45 ET (13:45 GMT)

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