Renault and Nissan Introduce Modular-Production Strategy image

Renault and Nissan will introduce a modular-production strategy as the two companies aim at reducing costs by manufacturing more vehicles in common.

The two automakers will use the common module family technology to reduce process and engineering costs by 30% to 40% and also spending on parts by between 20% and 30% by 2020, according to Jean-Michel Billig, executive vice president of engineering and quality.

“Our aim is to cut the number of our suppliers globally as we develop our product line at the international level,” Billig told reporters at Renault headquarters in the Paris suburb of Boulogne-Billancourt.

Automakers in Europe are under a continuous pressure to find solutions to keep costs down as they plan to expand into emerging markets such as China, Russia and Brazil to cut their reliance on sluggish domestic markets. Renault and Nissan have signed the manufacturing and sales agreement in 1999, and Fiat and Chrysler have also begun to use common components.

Using the new strategy, Nissan and Renault will share almost 50% of parts by 2020 and the move will help the French automaker keep development and research costs at the current levels of 8% to 9% of full-year revenue.

Source: Bloomberg