Renault-Nissan & AVTOVAZ Create Common Purchasing Organization in Russia

TOGLIATTI, Russia--September 18, 2013: 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.

CPO will communicate a common position to suppliers on quality, cost and delivery deadlines, as well as develop relations with suppliers in order to increase parts localization in Russia. CPO will attract global companies to the AVTOVAZ and Renault-Nissan Alliance supplier base. This is expected to help upgrade the technology and quality of Russian suppliers.

The establishment of the CPO marks a new step in the development of the strategic partnership between AVTOVAZ and Renault-Nissan Alliance which began in 2008 when Renault took a 25% stake in Russia's largest automaker. CPO will stimulate the ongoing integration of AVTOVAZ and the Alliance, strengthening the competitiveness of the LADA brand and optimizing the production of new vehicles under the three partners' brands.