Nissan: 80% of future vehicles will be based on new Module Strategy

Integration of four business functions with Renault to build synergy



The Image of CMF
The Image of CMF

 Nissan Motor Co., Ltd. is promoting Common Module Family (CMF) strategy together with Renault S.A. In 2013, the OEM launched X-Trail, Rogue and Qashqai in the CMF-C and D segments. New model launches are scheduled also in the CMF-A and B segments. More than 80% of Renault-Nissan Alliance's future vehicles will be based on CMF and the two companies plans to produce 70% of their vehicles on CMF basis by 2020.

 Since April 1, 2014, the Alliance has integrated four major functions: Engineering, Manufacturing & Supply Chain Management, Purchasing, and Human Resources. The alliance plans to achieve a minimum EUR 4.3 billion annual synergy goals. In addition, the areas of partnerships with Daimler AG and Mitsubishi Motors Corporation will be extended. The Renault-Nissan Alliance thus aims to build up synergy effects within themselves and with the joint venture partners to compete with Toyota and VW Groups, whose production and sales volumes exceed those of the alliance.

Related reports:
Nissan: Profits declined in North America and emerging markets (posted in March 2014)
Toyota Introduces TNGA: New Vehicle Development Framework Initiatives (posted in January 2014)

70% of all Renault-Nissan vehicles to be based on CMF by 2020

 The Renault-Nissan Alliance is promoting the Common Module Family (CMF) modular architecture system. The Alliance plans to deploy CMF to 70% of their vehicles by 2020 in order to achieve 40% reduction in development cost per model and 30% reduction in parts cost. By introducing CMF, the Alliance aims to compete with Toyota Group and VW Group, both with larger production volumes.

 The savings achieved through CMF are used to add extra value to Nissan vehicles. For example, the Lane Departure Warning, the Around View Monitor and the Automatic Parking systems are available for the new Rogue, X-Trail and Qashqai, which were developed by using CMF in 2013.

 The Alliance plans to produce CMF-based vehicles in more than 10 countries through 2020. CMF will be offered in three vehicle segments.

Outline and objectives of CMF

 A Common Module Family (CMF) is an engineering approach that dissects the vehicle into five components: engine compartment, cockpit, front underbody, rear underbody and electrical/electronic systems. Several Big Modules are developed for each component. Development engineers are able to create unprecedentedly various models through different combinations of the Big Modules.
 A CMF is not platform sharing but a "modular architecture system" that can involve several platforms, according to the Alliance.
 CMF introduces new vehicle architecture and promotes common use of non-visible parts, which significantly reduce costs. This has enabled the Alliance to offer their new technologies in environmental and safety areas to all their customers.


Three primary segments of CMF

CMF-A  Small, fuel-efficient vehicles for high-growth markets
CMF-B  Mid-sized vehicles such as Nissan March or Renault Clio
CMF-C and D  Larger vehicles, including many Renault and Nissan SUVs as well as Crossovers

Source: Renault-Nissan Media Room (Note) CMF covers Renault, Dacia, Nissan, and Datsun brands. CMF does not cover Infiniti.



New model launches in three segments: CMF-C/D, A and B

 In 2013, the Renault-Nissan Alliance started to launch CMF models in the C and D segments. In 2015, they will develop and produce an ultra-low cost car using the CMF-A in India. For the next stage, they will develop the new Nissan March, Nissan Note, Renault Clio and other B-segment cars using CMF-B. The all-new March is scheduled to be released in 2016.


The new X-Trail The new X-Trail based on the CMF-C and D displayed at Tokyo Motor Show 2013 redi-GO CONCEPT The CMF-A based ultra-low cost Datsun "redi-GO CONCEPT," displayed at the 12th AUTO EXPO in India in February 2014


CMF-C/D segment vehicles to be released in 2013 and 2014

 In June 2013, the Renault-Nissan Alliance announced its CMF-based development plan. The first deployment of CMF will cover 1.6 million vehicles per year and 14 models (11 Renault Group models + 3 Nissan models) in the compact and large (C and D) segments. It will gradually increase CMF-based models from 2013 through 2020.


CMF-based models for the compact and large segments

Release Models
Nissan Later 2013 Qashqai (produced at the Sunderland plant in UK), Rogue (at the Tennessee plant in the US), X-Trail (in Japan and overseas plants)
Renault Later 2014 Scenic (MPV), Espace (MPV), Laguna (sedan and wagon)


CMF-A Project to develop and produce an ultra-low cost model in 2015

Ultra-low cost model based on CMF-A  In July 2013, Nissan announced the CMF-A project, which will develop the most affordable CMF model. Production will start in 2015 at a plant in Chennai, India. In the expectation that the Indians should be able to develop a vehicle at lower cost as Tata Motors Limited developed the Nano, the Alliance will perform all the processes from development through production in India. This ultra-low cost model will be exported to Southeast Asia as well as to Latin America.
 The Alliance had a project with Bajaj Auto Ltd. for developing an ultra-low cost car of USD 2,500, but dissolved the project in 2012 due to a policy conflict. The CMF-A project has replaced this Bajaj project.
Datsun i2  The Datsun "redi-GO CONCEPT (coded as Datsun i2 inside Nissan)" was displayed at the AUTO EXPO 2014. It is a crossover combining hatchback practicality with a rugged sports utility vehicle (SUV) stance. The first new-car-buyers are the targeted customers of the Datsun i2 to be affordably priced between INR 200,000 and INR 300,000. It will be a possible competitor of the Maruti 800. (The price of the Datsun Go, launched in March 2014 in India, starts from INR 312,270.)
Renault A-Entry  Renault plans to develop an ultra-low cost car based on the redi-GO CONCEPT and to produce the model in India. The company will market the model in South America as well as in India.


CMF-B segment vehicles to be launched in 2016

 The Renault-Nissan Alliance will develop next models of the Nissan March, Renault Clio and other B-segment cars based on the CMF architecture and start the production as early as 2016. A maximum of three million vehicles per year will be based on the CMF-B. The Alliance plans to standardize 50% of parts among the B-segment cars.
 The Nissan Micra currently manufactured in India will be produced at a Renault plant in France from 2016 (82,000 units/year), according to the announcement in April 2013. The Indian plant will be operated at a full scale with additional production of the Datsun GO, GO+, and the new low-cost car based on the redi-GO CONCEPT.



Renault-Nissan integrates four business functions

 On April 1, 2014, the Renault-Nissan Alliance has integrated its four major functions: Engineering, Manufacturing & Supply Chain Management, Purchasing, and Human Resources. Newly appointed Alliance Executive Vice Presidents (EVP) will take charge of each function: Alliance EVPs for Engineering and Manufacturing & Supply Chain Management are appointed from Nissan and those for Purchasing and Human Resources are appointed from Renault.

 The Alliance partners have promoted cooperation on project basis, including platform sharing. This time, they are integrating their organizations, while maintaining respective identities and corporate cultures. The Alliance aims to take advantage of the economies of scale of over eight million vehicles in total, and to become further competitive with Toyota Group and VW Group. The Alliance plans to achieve a minimum EUR 4.3 billion annual synergy goals by 2016.

Renault and Nissan to integrate four major functions

Engineering  Renault and Nissan will combine Common Module Family (CMF) engineering, advanced research, powertrain development including electric vehicles, systems engineering and testing facilities and services. The Alliance aims to prevent overlapping investment by dividing responsible areas in engineering between the two partners.
 Approximately 20,000 employees, namely 60% of all the engineers, belong to the new Alliance engineering function after the integration. The remaining 40% will work on areas that represent vehicle characteristics of each Nissan and Renault brand.
Manufacturing Engineering & Supply Chain Management  The new integrated manufacturing function will cover global production strategy (including procurement from outside the Alliance), production process engineering, production control and supply chain management.
 The both OEMs' plants will remain as they are and continue to make respective production plans. Responsibility for both OEMs' manufacturing operations, however, will be centralized to the same officers so that the Alliance will be capable of centralized control over the overall production management. Logistics and supply chain as well as production methods will be standardized so that they can manufacture both Nissan and Renault vehicles at each other's plants and accommodate production capacity each other.
Purchasing  Renault and Nissan have had an integrated purchasing organization for more than a decade. They expect the integration of major engineering and manufacturing functions will drive greater purchasing synergies and larger economies of scale.
 Previously in many cases, Renault and Nissan placed orders with different suppliers for parts and components of a common platform. They will increasingly place orders for the same parts with the same supplier, and larger orders are expected to reduce costs significantly.
Human Resources  Renault and Nissan will implement common human resource processes throughout the Alliance, including a unified "talent management" policy (Note).
 Renault and Nissan will promote personnel exchanges between them. They will build a database of their 2,000 top officials so that they can appoint right people in the right positions from the both OEMs in such cases as new plant launches.

Note: "Talent management" refers to "strategic efforts and systems for recruitment, competence development, evaluation and compensation" in order to train and develop human resources.



To expand collaboration with Daimler AG

 In April 2010, the Renault-Nissan Alliance and Daimler AG signed a partnership agreement including mutual shareholding. According to Nissan, ten significant projects were ongoing as of September 2013, when the OEM announced that Nissan's NV350 Urvan commercial vans would be supplied to Mitsubishi Fuso Truck and Bus Corporation (MFTBC) of the Daimler Group.

 Many of their collaborations are related to the Infiniti brand luxury cars, but the scope is expanding to include small cars such as the smart/Twingo, commercial vehicles and joint development of fuel cell vehicles (FCV).

Joint projects of Renault-Nissan and Daimler

Production of gasoline engines  Production of Mercedes-Benz 4-cylinder gasoline engines will start in mid-2014 at a new facility constructed at Nissan's engine plant in Decherd, Tennessee. The engines will be supplied for the Mercedes-Benz C-Class, built at Daimler's plant in Tuscaloosa, Alabama, and for the all-new Infiniti as well.
Development of turbo-charged engines  The joint development is under progress for a new family of three and four cylinder gasoline engines with turbo-chargers and direct fuel injection.
Diesel-powered Infiniti Q50  Nissan launched the Infiniti Q50 fitted with Daimler's 2.2-liter diesel engine and automatic transmission in Europe in the fall of 2013.
The Nissan Skyline fitted with M-Benz engine  Nissan plans to release in Japan a new Skyline powered by a Mercedes-Benz 2,000 cc turbocharged engine by the end of 2014. Only a 3.5-liter gasoline engine with a hybrid system is available for the current Skyline model. The Infiniti Q50 is expected to mount the engine for exports. (A media report in April 2014.)
Infiniti Q30  In 2015, Nissan will release a model based on the Infiniti Q30 Concept, which will share components with Daimler's compact models. It will be manufactured at Sunderland, the U.K.
Production of small luxury cars  Nissan and Daimler announced that they were negotiating on production of small luxury cars together at Nissan's third plant in Mexico. As of April 2014, however, the plan does not seem to be substantiated.
Smart/Twingo  Production of Daimler's four-seater "Smart" and the Renault Twingo will begin at the Renault plant in Novo Mesto, Slovenia, for launches in later 2014. The four-seater "Smart Fourjoy" Concept was presented at the Frankfurt Motor Show in 2013.
 The new generations of the Smart and the Twingo are under development on the basis of a shared architecture.
M-Benz Citan  Daimler launched the Mercedes-Benz Citan light commercial van based on the Renault Kangoo in 2013.
FCV  A fuel cell vehicle is under development jointly by the Renault-Nissan, Daimler and Ford. Nissan plans to launch the model in 2017 and Daimler plans to start production in 2017.
Commercial vehicles  The MFTBC of the Daimler Group supplies 2-ton trucks to Nissan, while Nissan supplies the 1.5-ton Atlas F24 trucks to the MFTBC.
 Nissan will supply the NV350 Urvan commercial vans (NV350 Caravan in Japan) to the MFTBC by the end of 2014. MFTBC will sell them as the Canter vans in emerging countries in the Middle East, Asia and South America.

Note: Although competition is expected to rise between Nissan and Daimler in the luxury car segment, "The overlapping clientele of the Infiniti and Mercedes-Benz brands are limited and the cooperation is worth continuing as far as positive effects are larger than negative effects," according to the partners.



Considering joint development of entry-level global minicar with Mitsubishi Motors

 In June 2011, Nissan and Mitsubishi Motors Corporation  established NMKV Co., Ltd., a joint venture company to develop and produce minicars. The Nissan Dayz, Dayz Roox, Mitsubishi eK wagon and eK Space have already been launched in the market.

 In November 2013, the Alliance and Mitsubishi Motors announced that they would expand areas of their joint projects. Specifically, the projects will include co-development of a new entry-level car based on a minicar platform for the global market.

Renault-Nissan and Mitsubishi Motors to expand collaboration

To develop Mitsubishi brand sedans based on Renault cars D-segment  To develop a sedan in the D-segment based on a Renault car, presumably the Laguna, and launch it under the Mitsubishi brand in the U.S. and Canada. To manufacture this sedan at the Renault-Samsung plant in Busan, South Korea and export it to North America under the U.S.-Korea Free Trade Agreement (FTA).
C-segment  To develop a sedan in the global C-segment, presumably to be based on the Renault Megane. The manufacturing location is under discussion.
Entry-level global car  To strengthen the Nissan-Mitsubishi joint venture NMKV and develop a new entry-level car including an electric version for the global market. This model will be based on the platform used in the minicar that both OEMs sell in Japan.
Mini commercial electric vehicle (EV)  Supply of mini commercial EV from Mitsubishi Motors to Nissan is under consideration.
Sources:Joint press release by the Renault-Nissan Alliance and Mitsubishi Motors dated on Nov. 5, 2013.
Note 1. Mitsubishi Mortors' mid-term plan "New Stage 2016"(FY 2014 to FY 2016) announced on Nov. 5, 2013 advocates "effective use of resources through business partnerships."
2. Mitsubishi Motors has already been supplied with Nissan's luxury sedans, the Fuga and Cima and sells them in the market as the Mitsubishi Dignity and Proudia respectively. As for development and production of the sedans, Mitsubishi Motors will totally depend on the Renault-Nissan Alliance.



Renault-Nissan's 2013 global sales volume reaches 8.27 million

 In 2013, the Renault-Nissan Alliance including AVTOVAZ of Russia achieved record high global sales of 8,264,821 vehicles, up 2.1% from the previous year. The Alliance aims to further extend the integrated management and achieve larger synergy effects through leveraging the size of over eight million unit sales.

Renault-Nissan Alliance Global Sales

Nissan Renault AVTOVAZ Alliance Total
2012 4,940,133 2,550,286 606,778 8,097,197
2013 5,102,979 2,628,208 533,634 8,264,821

Source: Renault-Nissan Alliance news releases dated on Feb. 4, 2013, Feb. 7, 2014 Note: Mitsubishi Motors' global sales: 987,000 units in FY 2012 and 1,065,000 units estimated for FY 2013. Therefore the grand total sales of the Alliance and their increasingly strategic joint venture partner Mitsubishi Motors will exceed nine million units, which is competitive enough with Toyota Group (global sales of 9.98 million units in 2013) and VW Group (9.71 million units).

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