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FCA proposes merger with Renault

Time 11:08 am, May 27, 2019

FIAT Chrysler has proposed a merger with French car manufacturer Renault aimed at saving billions of dollars for both companies.

Fiat Chrysler Automobiles (FCA) said the merged company would be 50 per cent owned by FCA shareholders and 50 per cent by Renault shareholders.

Renault’s board has been meeting outside Paris about the possible merger.


Shares in both companies jumped more than 10 per cent on the news of the offer.

The companies have been in discussions for weeks, as major world car makers seek ways to save money amid the huge costs of pivoting the industry to electric and autonomous cars.

Renault is already in an alliance with Japan’s Nissan and Mitsubishi, but the partnership has been troubled since the November arrest of joint chief Carlos Ghosn.

The French government, which owns 15 per cent of Renault, is cautious about the new merger idea.


A French official said the state will only agree to a merger if it makes sense for jobs and France’s national interests. The official said Japanese authorities have also been informed, and that France would prefer a tie-up within the existing Renault-Nissan-Mitsubishi alliance.

The statement said the merged company would produce 8.7 million vehicles annually and save five billion euros (£4.4 billion) for the companies each year by sharing research, purchasing and other activities.

It said the deal would involve no plant closures, but did not address potential job cuts.

Nissan Motor Co chief executive Hiroto Saikawa would not comment directly on the idea of a Renault-FCA merger but said: ‘I am always open to exchanging constructive views on strengthening the alliance.’

Collaboration between car makers has taken on importance in recent years as they seek to build their technological capabilities in pursuit of electrical vehicles, net connectivity and artificial intelligence for vehicles. Car makers are also under pressure from regulators, particularly in Europe and China, to develop electric vehicles so they can meet tougher pollution limits.

During an earnings conference call earlier this month, FCA CEO Mike Manley told shareholders that he believed there would be ‘significant opportunities’ in terms of strategic partnerships or alliances in the next two or three years.

Manley also told analysts that Fiat was taking action to address weaknesses in Europe.

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