There are talks of Renault merging with Fiat Chrysler. France’s Renault SA intends on restarting the conversation with Japan’s Nissan Motor Co Ltd within 12 months, which will set sight on a bid to buy Fiat Chrysler Automobiles NV, according to the financialtimes.com. This plan signals the return to the previous strategy which was supported by former Nissan boss Carlos Ghosn.
Although the French government had opposed the move, the recent formation of a new alliance board led by Renault Chairman Jean-Dominique Senard has led many to believe that the two parties can now go ahead with the merger plans, according to financialtimesreport.com. Fiat is seeking a partnership and the company is talking with rivals for a deal, the report has stated. Renault and Nissan are also anticipated to revamp their boards, with Nissan adding the majority of outside directors and Renault reducing its board’s size.
As for the recent creation of the new alliance board led by Renault chairman Jean-Dominique Senard, it has enhanced confidence that merger plans can advance, according to people familiar with both sides. When combined, both companies would then pursue a further purchase that would bulk up the business. With the business going bigger it’s a fair chance for a fight for global dominance with the likes of Toyota and Volkswagen.
The proposal for the merging has been in talks for the last two to three years but with the government coming in the way, it never went into fruition. FCA has been actively seeking a merger, with chairman John Elkann and meeting with other rivals, including France’s PSA, in order to see how a potential deal can strengthen the carmaker. It’s a possibility that FCA will successfully have merged with another group by the time Nissan and Renault sort out their differences.
Nissan and Renault are ready to sort out any rough patches in the two automaker’s current alliance. Nothing has been set but it is reported that talks about merging will begin in the next year. The two companies are looking to have another automaker to create a larger automotive powerhouse: Fiat Chrysler Automobiles.
Keep in mind that although Renault is reportedly interested in buying FCA, it doesn’t mean that Peugeot is no longer interested in buying FCA. Should FCA want to sell, it’ll probably get more than one bidder in an auction-style corporate sale process. Peugeot is a French automotive manufacturer, part of Groupe PSA.
The Financial Times reported that a merged Renault-Nissan would make a bid for FCA, which has sought out cooperation among other automakers for years. As for better profitability, the late FCA CEO Sergio Marchionne was candidly open about his desire to merge the automaker. The merge has been a possibility for the last three years.
Before his death, Marchionne transformed Fiat Chrysler’s Tenure. In over 14 years as the head of what’s now Fiat Chrysler Automobiles NV, Marchionne transformed a European carmaker into a global giant. Here are a few things he has accomplished over the years.
In June of 2004, Marchionne was appointed CEO of Fiat and with it, his plan was started by his predecessor to end years of losses, and soon announced plans to revamp Fiat’s organization to make it more efficient. In February of 2005, Marchionne extracted over $2 billion from General Motors to finish a debate over the ownership of their joint venture and announced the plan to terminate other alliances with the U.S. carmaker. In June of 2009, Fiat takes ownership of Chrysler assets, pledging to reopen factories idled during its bankruptcy.
Mike Manley, the new FCA chief executive, still believes in Mr. Marchionne’s thesis that carmaker’s need to combine. “How you get scale is a challenge that everyone is facing,” he told the Financial Times at the 2019 Geneva Motor Show. “That’s why you’re seeing so much interest in partnerships and mergers.”
If this is sounding familiar, it’s because it’s been a topic of conversation for some time already. First, The Wall Street Journal announced PSA Group’s fleeting interest in FCA. And then the Financial Times’ reported Renault’s interest in a full-blown merger with Nissan, something that Ghosn has been trying to do.
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