Renault-Nissan, Avtovaz to create merged purchasing organization in Russia
MOSCOW. Dec 15 (Interfax) - Renault-Nissan and OJSC Avtovaz are planning to create a merged purchasing organization in Russia, Renault said in a statement.
"The new Avtovaz-Renault-Nissan Purchasing Organization, or ARNPO, will manage the purchasing activities of all three partners in Russia under the international standards of the Renault-Nissan Purchasing Organization (RNPO). Established in 2001, RNPO handles all purchasing activities of Renault and Nissan worldwide and is the biggest contributor to Renault-Nissan synergies," the statement says.
"Thanks to the combined purchasing volume of Renault, Nissan and Avtovaz, ARNPO will become the largest buyer in Russia's auto industry and will help integrate Avtovaz further into the global industry," it says.
"ARNPO will take over the activities of Common Purchasing Organization (CPO), an equally-owned company established by RNPO and Avtovaz in September 2013 to manage purchases for the three companies' joint projects in Russia. Recently became an affiliate of RNPO following RNPO's purchase of a 49% stake in CPO from Avtovaz. RNPO's stake in CPO now stands at 99%. RNPO's share increase in CPO has been approved by Russia's Federal Anti-monopoly Service. In January, CPO will change its name to Avtovaz-Renault-Nissan Purchasing Organization (ARNPO) and integrate the individual purchasing departments of the three partners in Russia as well," Renault said. RNPO was organized in 2001 and makes purchases for Renault and Nissan all around the world.
"ARNPO's main responsibilities will include purchasing of parts, equipment and tooling, as well as indirect purchasing, including services, for Avtovaz, Renault and Nissan; supplier quality and development; establishing unified RNPO procedures to select and improve the local supplier base in Russia to achieve international quality, cost, delivery, development and manufacturing standards, and to assist with Russia's continued integration into the global automobile market," the statement says.
"ARNPO will be structured as a limited liability company headquartered in Togliatti, with branches in Moscow, Izhevsk and St. Petersburg. Venkatram Mamillapalle, purchasing vice president of Avtovaz, will be appointed general director of ARNPO in January 2015. The new structure will integrate employees from Renault, Nissan and Avtovaz in Russia," it says.
In early December, Avtovaz's board of directors approved agreements on the sale of the Russian automaker's 50% stake in the charter capital of LLC Joint Purchasing Organization. Avtovaz will sell 49% interest in the purchasing organization to the Renault-Nissan alliance's purchasing organization. The other 1% will go to Renault.
The Avtovaz and the Renault-Nissan purchasing organization created the joint venture on a 50-50 basis in September 2013. The new organization was expected to use the same methods and standards as the Renault-Nissan purchasing organization and manage the "defined perimeter" of purchasing activity at Avtovaz, Renault and Nissan in Russia, notably industrial equipment, power trains and cars that use joint platforms. The companies expected that the venture would produce significant savings through economies of scale and strengthen the competitiveness of the Lada brand.
A Renault representative told Interfax that the main different between the new purchasing organization and the one created previously is the unification of all the partners' purchases and the replacement of purchasing organizations that each manufacturer has. "The creation of a new organization stems from expanded cooperation among the alliance's partners. While the previous version of the organization assumed cooperation on joint projects in, for example, the production of automobiles at the alliance's [B0] platform, the new organization will be responsible for all the partner companies' purchases in Russia irrespective of the projects," the representative said.