By on May 29, 2019

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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25 Comments on “Report: Renault to Decide on Fiat Chrysler Merger Plan Next Week...”


  • avatar
    R Henry

    “FCA claims the pair-up could result in $5.6 billion in annual efficiencies”

    I remember similar statements about every single merger ever undertaken. Such statements always translate to the redundancies of about 50% of the white collar workforce and factory closings.

    • 0 avatar
      Steve203

      “… always translate to the redundancies of about 50% of the white collar workforce and factory closings.”

      Yup, because laying people off is the easiest way to please the stock markets with “cost reducing synergies”.

      In their discussion of how their brands cover various segments of the market, Dodge and Chrysler were absent. If they drop Dodge and Chrysler, there are no products for either Windsor or Brampton.

      • 0 avatar
        Mnemic

        They need to just sell Dodge, Plymouth, Chrysler, Hemi, Mopar and all associated trademarks to someone that will nurture and grow the brands. Right now FCA is strangling them and if they end up with Nissan, may phase them out all together.

        • 0 avatar
          R Henry

          Who would buy those trademarks in this truck and CUV-obsessed market? What value do they have?

          • 0 avatar
            Mnemic

            *CUV and muscle car obsessed market. And my assumption was Geely would buy them. It would be the first time Chrysler would have a near limitless bank account. They would stay HQ’d in Detroit, ownership would just change and they’d actually invest in them.

    • 0 avatar
      FreedMike

      I’ve learned that when you hear your employer spout corporate-speak phrases like “enhanced efficiencies” or “maximizing shareholder value,” it’s time to shine up the resume.

      • 0 avatar
        EGSE

        I can personally attest to that. Whatever savings are gained will be swamped out by the follow-on unintended consequences resulting in customer dis-satisfaction and eventually reduced market share. The only thing that goes to plan are the year-end bonuses collected by the Einsteins responsible for the clusterfark.

      • 0 avatar
        87 Morgan

        FreedMike you are 100% correct that a merger like this leads to mass layoffs almost immediately; well first those departments that are tagged with elimination will have to train the ‘other’ department tasked with taking over the duties of said eliminated department. Nothing brings a sense of self worth and satisfaction than training the person who will ultimately have your job and pay check in the next 60 days and you are faced with economic uncertainty and loss of identity in some cases. Adulting, good times.

        • 0 avatar
          highdesertcat

          But what I think is worse than the lay-offs is that the merged product line will take on that French automotive flavor.

          • 0 avatar
            Steve203

            “But what I think is worse than the lay-offs is that the merged product line will take on that French automotive flavor.”

            I watched a European test of the top of the line Renault Talisman and noticed that at 200kph, the car had a visible rhythmic bounce to it, as the driver could be clearly seen bouncing in his seat. Renaults of the past had far better suspension control than that, so I would suggest than Renault is being Nissanated.

  • avatar
    Steve203

    Cross-licensing the intellectual property between Nissan and Renault/FCA is the least of the problems. Platform sharing between competing companies is routine. The Opel Corsa and Adam ride on a Fiat platform. With Renault in control of Nissan, and merged with FCA, the cross-licensing agreement, if they bothered putting anything on paper, would be anything but an arm’s length contract.

    The obstacle is GM and Ford crying for the government to block the deal on anti-trust grounds.

  • avatar
    MQHokie

    Might make for some interesting dynamics in Formula 1.

  • avatar
    87 Morgan

    I am trying to recall a merger like this having a succesful outcome, I welcome others assistance in blowing the cob webs off.

    MSN has an article with the thesis that if this merger comes to fruition than Ford and GM will be forced to merge. I am not certain that I agree with the thought line, but it was an interesting take nonetheless.

    Since I am in and around the retail level as a career (we can argue if that was a good life choice later..) it would be interesting to see how these mergers play out. I still believe that we have too many distribution points leading to an essentially saturated market and retail points that are too costly to maintain. I wonder if smaller manufacturer specific service facilities would make more sense and dump the cash drain front end altogether.

  • avatar
    thegamper

    I suppose the merger makes sense on paper. FCA really only brings scale to the table, which is something.

    I think American workers should probably be scared though because nobody in France is losing their jobs. I think its legal there to kill your boss and set your work place on fire and or hold management hostage if they try to fire you.

    Meaning in places that dont really follow Marxist principles, you just may be in line for a pink slip when shareholders demand some cost cutting.

    In any event, its a lot of mouths to feed, a lot of masters to answer to and of course now we have two foreign governments involved in ownership with voting rights on the board I suspect.

  • avatar
    schmitt trigger

    Pairing of equals?
    It will be mostly a ménage à trois. I’ll stop my analogy here.

    Now seriously. I agree with the posters above that the immediate result will be the job elimination.
    Whatever remains of hourly worker’s will be transferred to lower cost countries. White collar workers, specially if you are over 50 years old, will be asked to retire, being replaced by 20-something kids.

    Welcome to the brave new world of vulture capitalism.

  • avatar
    JMII

    Why does FCA keep trying to find a mate? Is it because because FCA is really just Jeep and RAM these days? Pretty much every few months its another FCA merger. At this point it would be easier to list who they haven’t asked out on a date.

  • avatar
    Fred

    What does Renault have to gain with this merger? I can’t think of much.

    • 0 avatar
      JohnTaurus

      Truck and SUV models, an actual presence in North America, and the profits generated by the aforementioned trucks and SUVs. Jeep is a global brand now, and even Ram is making inroads into other markets. Both are highly profitable.

  • avatar
    namesakeone

    I think what is really telling is that Chrysler (division) has no SUV (or CUV or crossover or etc.) in its current lineup. I can only think of two other nameplates available in America that don’t: Genesis (which will, by 2021) and Aston Martin.

    • 0 avatar
      JohnTaurus

      Yes, it’s time to “sh¡t or get off the pot”, as my dad would say, for Chrysler (as a brand). Why they dont have a version of the Durango, Cherokee and the Chinese Grand Commander, I dont know. An ancient sedan with a limited market, and a minivan, is no justification for the brand to exist.

      Perhaps this merger, should it happen, will give the brand an influx of the product it so badly needs. Some utilities and maybe a sedan wouldnt hurt.

      • 0 avatar
        namesakeone

        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.

  • avatar
    Rich Fitzwell

    These two car companies are not the only zombie companies out there, this is the byproduct of a Fed that ‘fixes” interest rates and does not allow the market to “discover” the real rates, this allows unlimited borrowing as far as you can see, it all works until it doesn’t.

  • avatar
    Jeff S

    I think the opposite of an influx of product, more like Chrysler will end up in the dust pin of dead brands and possibly Dodge too. The real value in FCA is the American distribution network and Jeep and Ram. A minivan and aging muscle cars and sedans don’t bring enough profit to justify their existence.

  • avatar
    namesakeone

    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.

  • avatar
    conundrum

    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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