If Fiat Chrysler Automobiles Merges With Renault The New Group Will Become The World’s Third Largest Car Company

A proposal for a €32.6bn merger with Renault has been made by Fiat Chrysler Automobiles, and acknowledged by Renault’s board of directors as something “to study with interest”. The merger would see FCA and Renault each own 50 per cent of the business, and give combined sales worldwide of 8.7m vehicles a year, which is more than General Motors sells and third globally only to Volkswagen and Toyota.

Renault currently works closely with Nissan, an alliance that is likely to continue regardless of whether or not the merger takes place, but it’s thought that a previously proposed merger with Nissan would be put on hold. This would also relieve some of the pressure caused by the arrest of Nissan chairman Carlos Ghosn—he was arrested in Tokyo in November 2018 on charges of financial misconduct, though he maintains his innocence.

A merger between FCA and Renault would bring together Italy’s Agnelli family, which currently owns 29 per cent of FCA, with the French government, which owns 15 per cent of Renault. John Elkann, who head the Agnelli family’s investment vehicle, Exor, is expected to become chairman of the merged companies. Englishman Mike Manley, who is chief executive of FCA, is expected to be named chief operating officer.

The merger would expand the companies’ manufacturing capabilities and technologies, and save an estimated €1bn a year across the companies, though, FCA says, that would not be through plant closures but “through more capital efficient investment in common global vehicle platforms, architectures, powertrains and technologies”.  The French government has said it is “in favour” of a deal as long as it was “at the same time favourable to the economic development of Renault and obviously to the employees of Renault”.

Image courtesy of Renault