TOKYO -- Nissan Motor Co. and French partner Renault SA are already targeting a 28 percent increase in joint cost savings to 5.5 billion euros ($6.11 billion) by 2018, but a top executive says the impact will be even bigger after bringing Mitsubishi Motors Corp. into the alliance.
Arnaud Deboeuf, senior vice president of the Renault-Nissan alliance, said the companies achieved joint savings of 4.3 billion euros ($4.77 billion) in 2015, a year ahead of the 2016 timeline set by Carlos Ghosn, CEO of both companies.
The alliance, which has a Nissan factory in Britain and Renault factories in mainland Europe, is also still trying to assess the impact of Britain’s decision to leave the European Union, he added. Last month’s so-called Brexit vote will have some impact on Nissan but that the company has no plans for any short-term changes to operations, Deboeuf said.
Ghosn has made generating synergies -- joint savings through shared work in engineering, purchasing, production and back-office operations -- a driving force behind boosting profitability at both automakers. Key to the push has been widening the alliance to include other partners, including Germany’s Daimler AG and AvtoVAZ, Russia’s largest carmaker.
The group aims to add Mitsubishi by year’s end following Nissan’s proposal in May to buy a controlling 34 percent stake in Mitsubishi for 237 billion yen ($2.28 billion).
Partnering with Mitsubishi will generate additional savings that push the alliance beyond its goal of reaching 5.5 billion euros in cost reductions by 2018, Deboeuf said.
Nissan is currently doing due diligence on the deal.
“The target will increase,” Deboeuf said in a Monday briefing at Nissan’s global headquarters. “The main purpose of this work is to find additional synergies between Nissan and Mitsubishi. After, we will look at global synergies for the alliance.”
Of the 4.3 billion euros ($4.77 billion) in combined synergies achieved last year, Nissan reaped the lion’s share of savings or 2.5 billion euros ($2.78 billion). Renault derived 1.8 billion euros ($2.0 billion) of benefit, Deboeuf said.
Joint purchasing accounted for the biggest chunk of savings at 33 percent.
Shared engineering contributed about 26 percent of the savings and manufacturing chipped in about 17 percent of the cost reductions. Engineering and manufacturing received a lift through the introduction of a new modularized vehicle platform, called the common module family, that increasingly underpins new vehicles at both Nissan and Renault.
“With engineering, we try to avoid double development,” Deboeuf said. He cited autonomous driving technology as one area where both companies pool resources. By 2020, the companies aim to introduce 10 models with autonomous driving technologies
By the same year, the Alliance wants 70 percent of its vehicles to be built on the new common module family architectures. The Nissan Rogue and Qashqai crossovers, for example, shares a C-D-segment platform with Renault vehicles. Last year, the companies introduced a new A-segment platform for small cars from Datsun and Renault.
Some vehicles share more than 65 percent of their parts, he said. But the key is commonizing unseen components, so the different brands maintain their own identity.
The 2018 target of 5.5 billion euros ($6.11 billion) includes a target of 80 percent localized production. There may be adjustments to that footprint, depending on the outcome of Britain’s withdrawal from the EU. But the alliance won’t be making any knee-jerk reactions about moving production out of Britain because of concerns about trade.
“When it comes to shifting production, it’s very difficult,” Deboeuf said.
A decision to manufacture a nameplate in any factory, including Nissan’s plant in Sunderland, England, is a long-term investment of six to seven years, he noted.
“The position in Sunderland is fixed. Now the question would be for the future production,” he said, adding it is too early to answer that because the impact is still unclear.