(Bobit) — Reports emerged over Memorial Day weekend that Fiat Chrysler Automobiles has altered the course of technology-sharing discussions with Groupe Renault by proposing a 50/50 merger between the Italian-American and French automakers.
FCA’s chairman, John Elkann, appears to be aggressively campaigning for the proposal, which Renault executives said they would “study with interest” in a brief statement released Monday.
In a message to Japan’s Nikkei newspaper, Elkann hinted at the merger’s potential to create the world’s third-largest auto manufacturer, accounting for 8.7 million new units in 2018. Counting Renault’s Japanese partners, Nissan and Mitsubishi, total volume would exceed 15 million, surpassing Volkswagen (10.8 million) and Toyota (10.6 million).
“Our proposed merger with Renault will create the potential to build a global partnership with all three of these great companies during this period of unprecedented transformation in our industry,” Elkann wrote early Tuesday. “I have huge respect for Nissan and Mitsubishi, and their products and businesses. … Our proposal to Renault is one we believe will be transformative in many positive ways.”
The proposal lays out $5.6 billion in annual cost savings based on joint research and platform development and improved purchasing power; Elkann stressed no plant closures would be necessary.
Renault and Nissan were in merger talks as recently as March. Analysts with the Financial Times, among other outlets, speculated the companies could move quickly to acquire FCA after merging.
Writing for Bloomberg, opinion columnist Chris Bryant noted the companies share similar market capitalizations and said FCA stood to gain from Renault’s advances in electric-vehicle technology; presumably, Renault would benefit from FCA’s established presence in the North American market. But he found the timing curious, given the ongoing fallout from the abrupt departure of the former head of the Renault-Nissan-Mitsubishi Alliance, Carlos Ghosn.
“It’s odd that Fiat has pitched a merger while Renault is in a tussle with its alliance partner Nissan. Perhaps the Japanese will view this as a helpful distraction that will stop Renault’s managers trying to deepen their alliance for the time being,” Bryant wrote.
“As with the alliance, politics presents a huge challenge to this merger,” he added. “Expect France and Italian interests to battle for every cent of investment spending. If job cuts become a necessity, things could get even more tense.”
Originally posted on Auto Dealer Today
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