Less is More: CEO Carlos Ghosn on Frugal Engineering

MAY

2015

Renault-Nissan Alliance Team

Less is More: CEO Carlos Ghosn on Frugal Engineering

In his latest LinkedIn Influencer post, Ghosn writes that rising demand, especially in emerging markets, will require companies to come up with creative solutions to limit the impact on the world’s resources. Learn how the Alliance’s CMF-A architecture - on which the new Renault Kwid compact hatchback is built - is an example of what Ghosn calls ‘frugal engineering.”

"One of the key growth strategies at the Renault-Nissan Alliance is to build appealing, fuel-efficient vehicles engineered and designed specifically for the high-potential, new-car markets around the world.

While recently these markets haven’t seen the same high levels of growth they did a few years ago, I believe this situation is temporary; their potential remains great.To succeed in markets such as India, Indonesia or Brazil and Russia, businesses need to rethink how they innovate and operate.

With these markets’ rise, an increasing global population and accompanying growth of their middle class, the demand on our resources and the need for creative solutions will only intensify.

We need to become both more frugal and more creative, to innovate while doing more with less. This is what we call "frugal engineering."

This week, in Chennai, India, I unveiled the first car to result from this systematic approach. The Renault Kwid is the first of several cars to be developed from our new CMF-A architecture. CMF stands for “Common Module Family,” which is the Alliance’s modular system of vehicle architectures.

Unlike a conventional “platform-sharing” system, in which a few models are built from one basic chassis, powertrain and components, the CMF approach divides the vehicle into five essential zones, or modules: the powertrain, front underbody, rear underbody, cockpit and the electronics.

Think of these like Lego bricks; we can mix and match them to create dozens of different, distinct vehicles for different markets, giving consumers more choices at a lower cost, because many of the thousands of individual parts are common among dozens of very different vehicles. Keep in mind, the global auto industry is a business where scale is critical.

This “frugal engineering” approach also applies to what we do in our assembly plants. The module set can be shared not just between cars of the same size, but between cars for different market segments, while using the same production lines. This means we can maximize the use of our capacity before having to build new assembly plants. It also allows us to bring new models to market faster.

By sharing the major components among a wider variety of models, we have substantially simplified our engineering and manufacturing processes. We expect CMF to reduce our investment costs by up to 40 percent and our purchasing costs by as much as 30 percent.

These savings allow us to pass along additional features to our customers, giving us a competitive advantage.

We have three primary CMF architectures: “A” for small, fuel-efficient and affordable vehicles for high-growth markets; “B” for mid-size vehicles; and “C/D” for larger vehicles, including many Renault and Nissan SUVs and crossovers.

Three SUVs were the first CMF vehicles to roll off assembly lines last year: the new Nissan X-Trail (multiple plants globally), Nissan Rogue (USA and South Korea), and Nissan Qashqai (UK). They are being followed in Europe by the Renault Espace and Renault Kadjar crossovers. All are all based on CMF-C/D, which will eventually yield at least 12 different vehicles; CMF-B will generate 25.

The Renault Kwid is the first car off the CMF-A compact-car architecture. It is truly a global car: Its development drew upon Alliance resources in France, Japan, Korea and India. Other cars based on CMF-A are in the works for other markets, the next one a Datsun that will debut in 2016.

The Renault Kwid offers a unique design, with SUV styling, for India’s competitive A-car segment, which accounts for about a quarter of the country’s retail car sales. Indian engineers and designers played an important role in developing the car, ensuring its features and design fully meet the needs of Indian customers. There are many first-time buyers in this segment. They want a modern car designed for them, rather than outdated car or one developed for other markets.

Rather than have one look-alike global car for all developing markets, our “frugal engineering” and CMF’s high level of flexibility is allowing us to create a variety of affordable, fuel-efficient cars for different markets that meet the specific needs and tastes of each.

This means we can offer “mobility for all” with the pride of owning a car designed with “me” in mind."

Category: Emerging Markets
Under: Renault KWID|LinkedIn|CMF-A|CMF
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Less is More: CEO Carlos Ghosn on Frugal Engineering

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