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Renault and Nissan name management team to step up integration

PARIS/TOKYO: Renault (RENA.PA) and Japanese alliance partner Nissan (7201.T) unveiled their boldest steps yet to combine key operations and pursue economies of scale to rival auto giants like Volkswagen (VOWG_p.DE).

The creation of an alliance management team was among moves announced by Renault-Nissan boss Carlos Ghosn on Monday after 15 years of looser cooperation between the carmakers.

The measures will yield an "immediate increase in efficiency", Ghosn said in a statement. "The synergies will then enable us to deliver higher-value vehicles to customers and stay at the leading edge of innovation".

Squeezed by the rising costs of emissions regulation at home and tougher competition in emerging markets, where demand is slowing, western carmakers have looked to mergers, alliances and ad-hoc production deals to share costs and boost profitability.

Renault and 43.4 percent-owned affiliate Nissan are rolling out new models on a jointly developed mass-market vehicle architecture and in January raised their savings goal to at least 4.3 billion euros ($6 billion) by 2016. <ID: nL5N0L446L>

Confirming plans outlined at the time, Ghosn named new executive vice presidents on Monday to run converged manufacturing, research and development, purchasing and human resource functions across the alliance, starting on April 1.

Renault and Nissan, which in turn owns 15 percent of Renault, are lagging behind Volkswagen, Hyundai-Kia (005380.KS) and Toyota (7203.T) on platform scale – the number of vehicles assembled from a common architecture.

In the face of faster-moving rival combinations such as the Fiat Chrysler (FIA.MI) merger, Ghosn has argued that cultural sensitivities prevented faster Renault-Nissan integration.

As a result, analysts and insiders say, both carmakers have missed major savings opportunities over the years as they developed separate programmes such as electric cars and light commercial vehicles.

The latest steps in the alliance will test whether their long courtship has made integration any easier.

Under the plans announced on Monday, Japanese executives from Nissan take the core new engineering and manufacturing leadership roles.

Tsuyoshi Yamaguchi, current head of platforms and parts, will hold overall responsibility for research and development in engines and vehicles, including future electric cars.

Industrial strategy, production and supply chain management will be headed by Shohei Kimura, while former Renault executives Christian Vandenhende and Marie-Francoise Damesin lead combined purchasing and human resources.

"The alliance has been in place for so many years now that I think employees know it's not a takeover but a partnership," London-based Barclays analyst Kristina Church said.

Investors will also view the new measures positively, Church predicted. "Especially as we're finally starting to see the (savings) numbers drop down to the bottom line," she said.

Renault's shares were 0.3 percent higher at 65.39 euros at 1035 GMT.

The shake-up will lead to a cascade of lower-level appointments, people with knowledge of the matter said on Monday, including the move of a former Nissan executive to head Renault's China operations.

Nissan is already a strong player in China, the world's biggest auto market, while Renault has yet to begin production with their joint venture partner Dongfeng Motor Group (0489.HK).

Besides their new mid-size vehicle architecture, Renault and Nissan have also stepped up cooperation in low-cost vehicles.

A range of no-frills cars is in joint development in India, and the carmakers are taking joint control this year of Russia's OAO AvtoVAZ, producing models based on Renault's Logan saloon at its Togliatti plant.

($1=0.7181 euros)

Source: Reuters



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