August 23, 2019
Latest News
European Union

Fiat Chrysler unveils Renault merger proposal

 Sign of Italian-US car manufacturer FCA, Fiat Chrysler Automobiles, in Frankfurt am Main, Germany, May 4, 2018 (reissued May 26, 2019). EPA-EFE/MAURITZ ANTIN

Sign of Italian-US car manufacturer FCA, Fiat Chrysler Automobiles, in Frankfurt am Main, Germany, May 4, 2018 (reissued May 26, 2019). EPA-EFE/MAURITZ ANTIN

By Sean McLain, Nick Kostov and Eric Sylvers

New York (USA), May 27 (efe-epa).- Fiat Chrysler Automobiles is proposing a merger with French rival Renault, a move that if completed would shake up the global automotive industry, according to a Dow Jones Newswires report made available to EFE on Monday.

Fiat said the proposed combined business would be 50 percent owned by FCA shareholders and 50 percent by Groupe Renault shareholders with a "balanced governance structure." The Italian-American car giant, which in addition to its namesake Fiat, also sells the popular Jeep and Ram truck brands, Renault said it would consider the proposal at a board meeting Monday.

If Renault and FCA merge, it would create a car company with a combined value of about $37 billion and annual vehicle production of almost nine million passenger cars and light trucks.

Such a combination would rank as the third-largest automaker by production, behind Volkswagen AG and Toyota Motor Co. but ahead of General Motors Co. Including Renault's alliance partners, Nissan Motor Co. and Mitsubishi Motors Corp., the output would swell to around 15 million, far ahead of the pack. Complicating any deal is a 20-year-old partnership between Renault and Nissan, in which they share technology and vehicle parts. Renault owns 43.4 percent of Nissan, while Nissan owns 15 percent of Renault.

The Renault-Nissan relationship has come under strain, though, as the two sides debate whether to overhaul the cross-shareholding arrangement and how to make joint decisions on future models and technologies.

Those differences have been exacerbated by the arrest last year of Carlos Ghosn, who forged the alliance between the two. There is no guarantee Fiat and Renault will reach an agreement. They are both considered symbols of national industry in their home countries, and national pride has often kept car makers across Europe independent.

But as demand slows for new cars, companies are more closely weighing the advantages of a global scale. A far-reaching alliance such as Renault's with Nissan and Mitsubishi could yield more savings, but analysts have said a full merger is the most efficient option, allowing for a single strategy without the diplomacy and compromises of an alliance. Renault's alliance with Nissan, which Mitsubishi joined later, was once held up as an example of how to address the high costs of developing and building new cars, without the perils of a full merger. Sharing vehicle platforms and engineering resources, and cooperating in areas such as procurement can help carmakers cut costs. But Renault and Nissan have been at odds since the arrest last year of Ghosn, who was chairman of both companies at the time.

Ghosn has been indicted by Tokyo prosecutors on charges including diverting Nissan money for personal gain.

He says he is innocent and was released on bail last month, Dow Jones added in a report made available to EFE. Also, the billions of dollars in savings that alliance members claim come from synergies have failed to translate into higher profitability than some of their regional peers. Renault approached Nissan last month to propose a full-blown merger between the two but was rebuffed. A merger between Fiat and Renault would shelve those plans, said a person familiar with the Fiat-Renault deal. "Nothing is going to happen on the alliance side for a while," the person said. "Nissan has to get its house in order first." Profit at Nissan is expected to plunge this year as the Japanese automaker seeks to overhaul its business in the United States. Mergers between rival car makers have a mixed record. Some stumble over clashing corporate cultures or national pride.

Failures include Daimler Benz's ill-fated spell as the owner of Chrysler. But France's PSA Group, maker of Peugeot, has successfully turned around Opel after buying the perennially money-losing German car maker from General Motors Co. Renault Chairman Jean-Dominique Senard met with French Finance Minister Bruno Le Maire on Friday and presented the merger plan, a person familiar with the matter said.

The French state, which owns 15 percent of Renault, isn't opposed to a merger, the person said. A French official said Paris notified the Japanese government about a potential deal after learning on Friday that Renault's board was expected to review it in the coming days. The French state will evaluate the final proposal with an open mind, the official said, adding the deal needs to make sense on an industrial level and have the potential to create a company with the heft to invest considerable sums in developing electric and autonomous vehicles. The official added that the government will be "particularly vigilant" on how such a deal affects jobs at the automakers. Should a full merger not come to fruition, Fiat Chrysler could still join the Renault-Nissan-Mitsubishi alliance, people familiar with the matter said. However, adding a fourth member to the alliance would potentially complicate matters at a time when it is under stress.

Renault and Nissan are trying to work out what the alliance will be in the future. Renault tried to propose a merger with Nissan last month but was rejected. Nissan has said it wants the companies to operate more independently. People familiar with the matter say Nissan hasn't been involved in the talks between Renault and Fiat Chrysler. It is unclear how executives at the Japanese carmaker will react.

Analysts said adding Fiat Chrysler's pickup trucks and Jeep SUVs to the alliance's operations in the US could complement Nissan's lineup, providing it with economies of scale in a market where it has recently underperformed.

dj/hh

News history

By Jesus Centeno

Vienna, Jun 28 (efe-epa).- Discrimination, racism, inequality, child poverty. The European Union is still the scene of serious violations of fundamental...

Design guru's exit marks Apple shift from products to services

By Tripp Mickle

Heatwave triggers vast wildfire in northeast Spain that engulfs 13,600 acres

Tarragona, Spain, Jun 27 (efe-epa).- A heatwave that has engulfed Western Europe in recent days has kindled the first serious wildfires in Spain this year...

From NY's Stonewall revolt to old age frailty, back to closet

By Jorge Fuentelsaz

US oil exports jump due to turmoil in Mideast

By Ryan Dezember

Stocks: Defense shares surge on spending

New York (USA), Jun 25 (efe-epa).- The United States may have held off on an airstrike against Iran in favor of sanctions, but US stock investors are...

Iran says new US sanctions end any chance of diplomacy

By Sune Engel Rasmussen in Beirut, Aresu Eqbali in Tehran and Dov Lieber in Jerusalem

Repairs to Harry and Meghan's new home cost UK taxpayers $2.8 million

Madrid, Jun 25 (efe-epa).- The official home that Queen Elizabeth II of the United Kingdom has given to the Duke and Duchess of Sussex was refurbished using...

3 Chinese banks deny being probed by US in relation to North Korea sanctions

Beijing, Jun 25 (efe-epa).- Three Chinese banks have denied that they were involved in any investigation related to possible violations of North Korea...

Revote in Istanbul rebukes Erdogan

By David Gauthier-Villars

Mercedes dominant in practice ahead of French F1 GP, finishing 1-2 twice

Paul Ricard Circuit (France), Jun 21 (efe-epa).- Mercedes put on a dominant performance in both free practice sessions at the Circuit Paul Ricard race track...

Apple explores shift away from China

By Yoko Kubota and Tripp Mickle

Real Madrid reinforces its defense with new signing Mendy

Madrid, Jun 19 (efe-epa).- Real Madrid reinforced its defensive lineup with the inclusion of France left-back Ferland Mendy who was presented to fans at the...

What to know about Libra cryptocurrency

New York (USA), Jun 19 (efe-epa).-Facebook just disclosed the first details of its long-anticipated cryptocurrency, called Libra, according to a Dow Jones...

Real Madrid unveils new forward Rodrygo: I hope to make Madrid fans happy

Madrid, Jun 18 (efe-epa).- Real Madrid unveiled the latest component of its new squad for the upcoming season, Brazilian forward Rodrygo, at its Santiago...

Former UEFA president Platini held over awarding 2022 FIFA World Cup to Qatar

Paris, Jun 18 (EFE).- Former UEFA president Michel Platini has been arrested on suspicion of corruption linked to a decision to award the 2022 World Cup to...

US says Israel not invited to Bahrain Conference

Washington, Jun 18 (efe-epa).- The White House said it won't invite the Israeli government to the unveiling of the economic part of its Israeli-Palestinian...

North Korea lobs insults at US but shields Trump

Seoul, Jun 17 (efe-epa).- A year after North Korean leader Kim Jong Un's historic first meeting with President Donald Trump, his government is once again...

China biotech companies poach US talent

Hong Kong (China) Jun 17 (efe-epa).- China-based biotechnology startups looking to go global are poaching talent from the biggest American pharmaceutical...

Toyota in pole at Le Mans with Kobayashi driving, Alonso, 2nd, dreams of win

Le Mans (France), Jun 14 (efe-epa).- The driver Kamui Kobayashi secured pole position in his Toyota TS050 ahead of 24 hours of Le Mans, leaving second-place...

HSBC boosts role as Saudi banker

By Rory Jones in Dubai and Margot Patrick in London

Nintendo shifts some production from China

By Takashi Mochizuki

Pepsi executive picked to lead UK's Reckitt

By Saabira Chaudhuri

I agree Welcome to news4europe.eu. We use cookies to improve your online experience. Find out more.