Renault-Nissan alliance sees savings growth slowing

Tue Jul 5, 2016 5:35am EDT
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By Laurence Frost and Naomi Tajitsu

PARIS/TOKYO (Reuters) - Renault's (RENA.PA: Quote) carmaking alliance with Nissan (7201.T: Quote) achieved record synergies of 4.3 billion euros ($4.8 billion) last year from closer integration, but savings growth is set to slow, a senior executive said.

Renault-Nissan Senior Vice President Arnaud Deboeuf also told reporters it was too early to assess the impact of Britain's vote to leave the European Union on Nissan's operations in the country.

"For sure it will have an impact," Deboeuf said. "But it's very difficult to say today what that impact will be."

Since the creation of the Franco-Japanese alliance in 1999, when Renault took a controlling stake in Nissan, it has combined some vehicle architectures, manufacturing assets and corporate functions, but at a pace that has frustrated some investors.

Prodded by analysts early last year to set a more ambitious goal for synergies in 2016 than the 4.3 billion euros announced, Renault-Nissan boss Carlos Ghosn, who heads both companies, said: "Obviously 4.3 billion euros is a conservative number. I think a reasonable target would be 5 billion euros."

But following a protracted governance dispute last year with the French government, Renault's biggest shareholder, tentative internal plans to announce major new areas of operational convergence early in 2016 did not materialize.

Renault-Nissan said in March it would combine quality and costing teams to support integration already underway in engineering, manufacturing, supply chain management, purchasing and human resources, while preparing initiatives in after-sales.

Deboeuf, who leads alliance convergence, did not repeat the 5 billion-euro objective for 2016, warning instead that savings may decline with manufacturing cycles before resuming their growth to a promised 5.5 billion euros in 2018.   Continued...

Carlos Ghosn, Chairman and CEO of the Renault-Nissan Alliance, attends a round table discussion during Auto China 2016 auto show in Beijing April 25, 2016. REUTERS/Kim Kyung-Hoon