Renault drops Nissan as cylinder head supplier

NISSAN will cease production of engine cylinder heads for alliance partner Renault at its plant in Sunderland UK from 2024.

According to a report published by Reuters, the cost cuts between the alliance partners come as part of what Renault calls “a multi-year cost-savings plan and strategy shift to redress its financial situation”.

“From early 2024, Nissan Sunderland Plant will cease production of cylinder heads on site. We do not expect this to result in job losses and are working with staff as we redeploy them to other parts of the business,” Nissan said in a statement.

The Sunderland facility employs approximately 250 staff to product cylinder heads for Renault’s petrol-powered models.

Speaking to Reuters, a Renault spokesperson said: “Following a study about the economics of cylinder head suppliers, Renault Group has found another supplier that will start working with us from 2024”.

The move raises further questions about the future of the Renault-Nissan-Mitsubishi alliance which has struggled to maintain pace since the departure of former CEO Carlos Ghosn.

The alliance said it wanted more than 80 per cent of their models to be based on common platform architecture by 2026, despite lingering questions about the strategic convergence at the three companies in the coming decade.

The news comes just a day after Nissan said it would discontinue engine production at its Infiniti Powertrain Plant facility in Decherd, Tennessee. That plant produces engines for Infiniti and Mercedes-Benz models, marking the end of the decade-long engine sharing collaboration between the two companies.

It isn’t the first time Renault Group has taken significant action towards cost cutting within the alliance. At the beginning of the COVID-19 pandemic the Group moved to cut 14,600 jobs globally and reduce production capacity by almost 20 per cent.

The Group faced further setbacks when Russia invaded Ukraine forcing significant changes to its Russian-based operations.

Renault transferred its 68 per cent stake in AvtoVAZ to the Russian science institute this April for the token sum of one rouble ($A0.019), essentially walking away from its €1.01 billion ($A1.41b) investment.

At the time, Renault ws producing three models based on the Dacia Duster platform at its Moscow plant, while AvtoVAZ builds Ladas, Russia’s top-selling brand with approximately 22 per cent of the market.

Renault received approximately 10 per cent of its total revenue from its Russian operations in 2021 and said in April of this year it was considering a €2.2 billion ($A3.26b) non-cash write-down to reflect the potential costs of suspending its operations in Russia.