In a major milestone for the Renault-Nissan Alliance, Renault and Dongfeng Motor today signed a contract for the creation of a joint venture company in China, the largest auto market in the world.  The two companies will invest 7.76 billion CNY (€870 million) in the 50-50 joint venture - Dongfeng Renault Automotive Company.

At the occasion of his recent visit to Togliatti, Russia, where he chaired the board of Directors of AVTOVAZ, CEO Carlos Ghosn shares his perspective on the Russian market and on the benefits of the partnership for AVTOVAZ and for the Alliance.

- Jointly-owned organization to oversee a defined scope of purchasing activities for Renault, Nissan and AVTOVAZ in Russia 

- Will allow partners to generate significant savings thanks to increased volumes and better pricing with suppliers

- Will strengthen global quality and competitiveness of LADA, AVTOVAZ’s iconic brand

The Renault-Nissan Alliance and AVTOVAZ today announced the establishment of a common purchasing organization in Russia. This structure will manage a defined scope of purchasing for Renault, Nissan and AVTOVAZ joint activities related to industrial equipment, powertrains and vehicles based on common platforms.

"Common Purchasing Organization” LLC (CPO) is equally owned by AVTOVAZ and Renault-Nissan Purchasing Organization (RNPO) on which it will be modeled. Established in 2001, RNPO is Renault-Nissan’s largest common organization and biggest contributor to new synergies derived from cost reductions and cost avoidance. RNPO covers all purchasing activities of both Renault and Nissan worldwide.

Like RNPO, CPO is expected to generate significant savings for the three partners in Russia thanks to increased volumes and better pricing with suppliers. CPO will use the RNPO methods and standards that have contributed to its success. RNPO generated 851 million euros in new synergies for Renault-Nissan in 2012, or about a third of total synergies.

Since the formation of the Alliance in 1999, Renault and Nissan have been collaborating on engines and gearboxes. Today powertrains are a major source of synergies for the group, accounting for about 670 million euros in savings in 2012. Even more synergies are expected from this field in the future as Renault and Nissan work together on the development of next-generation small petrol and diesel engines, among other projects.

The auto industry is probably better known for its intense competitiveness; companies finding more on which to disagree than agree. Trade associations such as the SMMT in the UK, ACEA in Europe and JAMA in Japan do create forums where automakers can debate areas of common interest and present a unified view on a specific issue.

Last year The World Economic Forum, best known for its annual meeting in Davos, helped to bring some of the major automakers together to make a unique but simple request to policy makers: we are ready to start working together to solve the environmental issues associated with vehicle transportation. Initially, the letter was signed by the CEOs of Daimler, Ford, the Renault-Nissan Alliance and Toyota. Last month, the CEOs of Audi, Hyundai and Volkswagen added their names to the list, and we expect more to follow.