FCA Proposes 50:50 Merger With Renault – What To Expect?

FCA Renault merger

Fiat Chrysler Automobiles and Groupe Renault could soon announce a 50:50 merger with electrification and future sustainability in mind

Yesterday, Fiat Chrysler Automobiles released a statement officially confirming the merger proposal to Groupe Renault. FCA has experience in previously attempting mergers under the leadership of the late Sergio Marchionne with giants like Ford and General Motors but this could be a whole different story.

The 50:50 merger with Renault S.A. comes following the latter’s distorted relationship with global alliance partner Nissan in recent times with the chaos created by Carlos Ghosn who was a prime figure in the partnership’s lasting success in the first place. The same kind of progress may not be possible with anyone else at the helm.

The French brand’s Board of Directors convened to look into the details of the proposed merger. Hot on the heels of the possible PSA talks for the Italian-American brand, the FCA-Renault partnership could become one of the most significant in the history considering that both brands are actively expanding into new opportunities for future growth.

Hyundai Plans Buying FCA

Groupe Renault, in particular, has been on a rough patch in the last few years with declining sales. With FCA making stronger statements courtesy of the Jeep brand, the merger could help in expanding the product portfolio of Renault and widen its footprint on the global markets it has never competed in or does not have a big presence at.

On the other hand, Renault’s electrification technologies could come in handy, as FCA is a notable mainstream brand that has not made a big step as far as zero-emission vehicles are concerned. If a deal comes into fruition, both the companies are predicted to have combined annual production of nine million units.

Furthermore, they will move to third among the world’s largest automakers behind VW and Toyota. Through localisation, sharing platforms and components and other cost-cutting activities, they could become more efficient as well. Shareholders of FCA and Renault will get equivalent equity stake if the merger gets a green signal.

Speculations regarding FCA-Renault partnership began back in March and reports suggest that an operation tie-up will be made soon before a full merger within the next twelve months. The talks may not involve Nissan and Mitsubishi at least initially.