At the end of May, news broke that Fiat Chrysler Automobiles (FCA) made a stunning proposal to Renault, sending shock waves through the automotive industry. Such a merger, would make the FCA/Renault partnership the third largest automaker in the world. But why would the FCA look to make such a move?
FCA has been looking at a partnership for years, but nothing has ever come of it. Recently with the ever expanding popularity of electronic vehicles (EVs) and autonomous (self-driving) vehicles, Fiat-Chrysler is looking to gain this technology without having to re-invent it. By partnering with Renault, the FCA would be able to share platforms to save money and expand the vehicles being offered. By offering smaller compact vehicles, EV Hybrid vehicles, and 100% electronic vehicles, the FCA would gain a lot more interest in the European automotive market!
Renault also has much to gain by partnering with the FCA. Sharing platforms for vehicles, vehicle frames, electronics, etc., would save them money as well. Furthermore, since the news broke that the Renault/Nissan ex-CEO Carlos Ghosn was imprisoned in Japan for alleged financial crimes, the relationship between the two companies has been rocky to say the least. Shifting it's alliance with the FCA would give Renault some much needed stability.
Nevertheless, talks between Renault and the FCA stayed between the two, and when news hit the media regarding the discussions, it stunned Nissan much like a spouse finding out that their partner has had wondering eyes for someone else on an episode of Jerry Springer! Being blindsided by the news, Nissan was not happy to say the least. As such, Nissan's disapproval of the negotiations, lead to the French government also not approving of such a merger. Now the merger having politically-involvement, FCA John Elkann rescinded the offer on June 6th. As such, the FCA released this official statement:
"FCA remains firmly convinced of the compelling, transformational rationale of a proposal that has been widely appreciated since it was submitted, the structure and terms of which were carefully balanced to deliver substantial benefits to all parties," the company said. "However it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully."
Both FCA and Renault companies blame the French government for the merger going sideways, but have refused to give up. FCA senor-advisors have supposedly been requested to be at Nissan Headquarters on June 10th to further discuss possible negotiations. At the current time, what we do know is that if such a merger were still possible, Nissan has made it clear that it expects Renault to significantly reduce its stake in Nissan. Nissan has mentioned it would simply “swap out one small 43% shareholder for a bigger 43% shareholder it doesn’t know.” Essentially stating that the only way they would "support" the merger, is by severing ties with Renault and finding a larger automotive manufacturer to take over the 43% stake that Renault currently holds.
If the FCA and Renault are able to revive their merger by satisfying both Nissan and the French government to gain their approval, the FCA/Renault 50/50 arrangement would not only save an estimated 5.6 billion dollars for the proposed alliance, but it would pave the road for Renault to once again drive the streets in cities across America, and likewise, give Fiat, Alfa-Romeo, and other FCA brands the much needed boost they need to strengthen their presence in the European Market.
- Mopar Mike
6/10/2019
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