Report: Renault to Decide on Fiat Chrysler Merger Plan Next Week

Steph Willems
by Steph Willems
report renault to decide on fiat chrysler merger plan next week

Will they or won’t they? That’s the question on everyone’s mind after Fiat Chrysler’s Monday morning proposition to French automaker Renault. A 50:50 pairing of equals, with Nissan and Mitsubishi shuffling awkwardly on the edge of the dance floor. To his credit, FCA Chairman John Elkann wants Renault’s alliance partners in on the deal.

According to a report out of Paris, Renault’s board will sit down within days to decide whether to pursue FCA’s offer.

According to sources who spoke to Reuters (via Automotive News), work sessions will commence within a few days, with board members expected to reach a consensus in the coming week. A decision to reject the offer or sign a non-binding agreement to proceed with merger negotiations will emerge from the meeting.

In the wake of Monday’s news, Renault said it was studying FCA’s proposal “with interest.”

As the French government asked for guarantees and the Italian government mulls a big stock buy (to match France’s stake in the proposed entity), a troubled Nissan plays the waiting game. Meanwhile, analysts are weighing the pros and cons. FCA claims the pair-up could result in $5.6 billion in annual efficiencies.

Platform swaps are top of mind, with many suggesting Renault’s modular CMF architecture and electric powertrain prowess stands to benefit FCA the most. It would give the automaker both a solution for its next-generation small vehicles and a way to lower its emissions footprint, saving billions in development costs over the long term — not to mention the millions FCA pays out for missing fuel economy targets.

Speaking to Reuters, Sam Fiorani, vice president of AutoForecast Solutions, said “a greater sharing of parts could really boost the profitability of Fiat Chrysler’s smaller vehicles,” adding that the CMF platform could underpin five Jeep models, among them the Renegade, Compass, and Cherokee. A merger could also spell big things for the global commercial van business of the two automakers.

“They could mix brands and vehicle sizes on the same assembly line, switch vehicles between plants to balance production, and even shift production from one country to another, depending on changes in demand, tariffs or other considerations,” Fiorani said.

For FCA to gain the CMF platform, it would first need to secure the approval of Nissan, which jointly developed the platform with Renault. A merger without Nissan would lead to headaches.

While Nissan could easily find its influence over Renault further diluted in a merger scenario, FCA has things it might want. Among them, and new full-size truck platform for use in future Titans and Armadas. In return, FCA could source a new midsize truck platform from Nissan. Recent reports claim Mitsubishi is spearheading the development of a platform to underpin the next-generation Nissan Frontier and overseas-market Mitsubishi L200/Triton.

[Image: Fiat Chrysler Automobiles]

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  • Namesakeone Namesakeone on May 29, 2019

    I doubt it. As a few others have said, should this merger take place--or even if it doesn't--a more likely scenario plays out that Chrysler (and possibly Dodge) goes the way of Eagle, Plymouth and DeSoto.

  • Conundrum Conundrum on May 29, 2019

    Renault has about one asset - its Nissan holdings valued at $11 billion or so. Its market value shorn of that is perhaps $3 or $4 billion, though some say basically zero. FCA is valued at $17 billion, so to get a 50/50 merger FCA is giving away $3 billion in dividends to shareholders to reduce its market price. It's nothing to do with crediting Ellkan for anything, because Renault keeping 43.4% of Nissan's stock is part of the deal. Otherwise it's just a garbage manufacturer/stock. Too bad they sprung it as a near-enough surprise, but Nissan is the only one with real EV experience and solid China sales. The other two are pikers at both games. So Nissan is the make or break for this exercise, and late reports say they're not uninterested. The wild card is the current pro-business neoliberal French government, currently punching workers in the face at home, which it must be said they are resisting. The French, regardless of political persuasions, are always shoving their faces in where it's not appreciated, so IMO they'll be the ones who make the people with actual money look twice at any deal if Macron insists on deploying French logic, indecipherable to other mere mortals. https://www.bloomberg.com/opinion/articles/2019-05-29/fiat-and-renault-is-hardly-a-merger-of-equals

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  • Zipper69 How much of a bite of the market has the BRONCO taken?The "old technology" of the Cherokee can't compete...
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  • Tassos the announcement is unnecessarily verbose, aka full of it. Most 'justifications" for the shutdown are shameless lies.
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