Renault board members will consider FCA’s merger proposal.
As it stands, the possible merger between Fiat Chrysler Automobiles (FCA) and French automaker Renault is just a proposal. However, sources close to both companies say Renault could decide whether to go ahead with talks within the next week, according to an Automotive News report.
On Monday, FCA announced its intentions to work out a deal with Renault, where both partners would take on a 50-50 joint role. In merging, the resulting company would become the world’s third-largest manufacturer, behind Toyota and Volkswagen, according to FCA’s release. Renault responded to the proposal, considering it “friendly” and that the company would weigh its options with interest.
Reports value the possible merger at $35 billion or more, and aims to combine a wide range of global brands. FCA’s brands — Alfa Romeo, Chrysler, Dodge, Fiat, Jeep, Maserati and Ram — would merge with Renault Group’s Renault, Dacia and Lada brands. FCA posits the potential savings in joint purchasing, R&D and joint manufacturing would benefit both companies.
More clarity next week?
If Renault does decide whether to move forward with merger talks within the next week, it may also shed light on the current state of the Renault-Nissan-Mitsubishi alliance. Nissan may be reluctant to fully jump on board with an FCA merger, if Renault develops vehicles in tandem with brands that have a strong identity, like Jeep.
Currently, Nissan is still working its way out of a business model burdened by high incentives and reliant on fleet sales. Renault also controls a large stake in Nissan, weakening the Japanese company’s voice against the backdrop of a merger with FCA. However, that’s not to say Nissan carries no importance for the Alliance. Nissan still sold 4.3 million cars in 2018, with its largest share being in China with 1.2 million cars. FCA is still working on expanding in the Chinese market, but does not have sales anywhere near that figure.
Reuters reports that Nissan CEO Hiroto Saikawa is open to the idea of a larger entity. “Strengthening the alliance and constructive discussions are forward-looking, and we are open to constructive discussions.”
