Renault, Fiat Chrysler want to form a global giant

Automotive: Renault and Fiat Chrysler Want to Form a Global Giant

Finance

The two manufacturers are expected to announce, on Monday 27th May, 2019, a partnership that would make them the world’s largest manufacturer, with 16 million vehicles sold per year.

Between them, they would form a new giant of the automobile : the French Renault and the Italian-American Fiat Chrysler are about to announce Monday 27th May, 2019 a project of alliance likely to upset the whole sector.

A statement should be issued saying that “will be studied the possibility of a rapprochement between the two groups,” said Sunday one of the sources interviewed by AFP, on condition of anonymity, pointing out that the ultimate goal would result in “a merger”.

The French state “vigilant on employment”

“An announcement is preparing for the next few hours, maybe tomorrow (Monday) morning before the opening of the stock market,” she added.

“Renault and Fiat Chrysler discuss a capital merger and are preparing to make a communication” Monday, confirmed a second source, adding that a board of directors was to be held around 8am.

The Financial Times and the Wall Street Journal had discussed talks as early as Saturday.

The French state, a major shareholder of Renault, took note “openly” of ongoing negotiations, but will be “vigilant on employment, industrial footprint and heritage interests,” said a source close to the government.

According to another source, the announcement would be the culmination of “discussions that had already begun under Carlos Ghosn”, the former boss emblematic of the French manufacturer, indicted in Japan for financial malpractice.

Crisis between Renault and Nissan

His arrest late November in Tokyo opened a crisis between Renault and its Japanese ally Nissan, behind the revelations that triggered the investigation.

“The question now is: what will be the reaction of the Japanese? “, Told AFP a source close to the file, which says fearing that they are” furious “. According to another source, “Nissan has not been involved in this case”. But another manager evokes first “positive” reactions …

Renault and Nissan refused to comment. A council of the Franco-Japanese alliance is expected Wednesday in Tokyo with leaders of both groups.

Nearly 16 million vehicles sold each year

A merger between Renault and Fiat Chrysler, also integrating the Japanese Nissan and Mitsubishi, would create a set of nearly 16 million vehicles, which would far outweigh rivals Volkswagen (10.6 million vehicles sold in 2018) and Toyota (10.59 million).

It would also change the balance of power in the Renault-Nissan-Mitsubishi team. Renault had pushed these last weeks for a reinforced integration with Nissan, which has rejected it. But who is now at risk of being relegated to the background.

Renault (with Dacia, Lada, Samsung, Alpine) sold 3.9 million vehicles last year, Nissan 5.65 million and Mitsubishi Motors 1.22. Fiat Chrysler, which has 13 brands (including Jeep, Alfa Romeo, Dodge, Ram …), has sold 4.8 million vehicles in 2018.

For several weeks, Fiat Chrysler (FCA) has been at the centre of rumours of reconciliation.

Complementary

“In the next two to three years, there will be real opportunities” in terms of alliances and partnerships in the automotive sector and “FCA will play an active and constructive role” in this movement of consolidation, had recently said the boss of FCA Mike Manley.

Renault, whose stock has fallen since the scandal Ghosn, weighs about 15 billion euros on the stock market, not far from 18 billion Fiat Chrysler. Yet it is the French group that appears in a strong position.

“Without a partner, Fiat can not survive. They have no electric vehicles, they only have old models, the only thing that keeps them alive is sales in the United States, “Ferdinand Dudenhöffer, director of Center Automotive Research (CAR), told AFP. , based in Germany.

According to him, “Renault is making a nice strategic move and is now moving away from Nissan, a partner whose intentions have become difficult to understand”.

Difficult global economy

All manufacturers are currently seeking to join forces to make the huge investments made necessary by technological developments in the automotive industry: electrification, autonomous driving, connected vehicles …

They also face a difficult global situation, including a reversal of the Chinese market.

FCA and Renault, who both make popular cars, would have the opportunity to share many technical elements. Renault would bring its know-how in electric vehicles.

FCA would offer a significant market share in North America, with large SUV vehicles and pickups particularly profitable, which are not the strong point of Renault.

Automotive: Renault and Fiat Chrysler Want to Form a Global Giant 1

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