By on August 3, 2019

The proposed merger between two auto giants — Renault-Nissan-Mitsubishi and Fiat Chrysler Automobiles — went nowhere earlier this year, but the door to the deal never swung fully shut. That’s according to a report in the Wall Street Journal, in which sources claim talks are ongoing to rekindle the romance.

FCA snatched away its offer in June after the French government, which owns 15 percent of Renault, intruded into discussions, citing a need to have alliance partner Nissan fully on board. The Japanese automaker, embroiled in scandal and a serious financial slump, kept its distance from those earlier talks, offering polite but unenthusiastic public support as reports emerged of concerns about its autonomy and shrinking influence under such a marriage.

To get the deal back on track, Renault would need to loosen its ties with Nissan.

According to the WSJ report, Nissan wants to even out the lopsided relationship between it and its alliance partner. Sources with knowledge of the talks — apparently ongoing since June — say the Japanese automaker wants Renault to cuts its 43.4 percent stake in the company.

While Nissan holds a 15-percent stake in Renault, it does not enjoy the voting rights afforded to Renault. However, before Renault can partly divest itself of Nissan, the French government would first have to give a thumbs-up. In earlier discussions with FCA, France sought assurances related to plant locations and employment numbers.

In withdrawing its proposal, FCA claimed it had “become clear that the political conditions in France do not currently exist for such a combination to proceed successfully.”

Talks between the two automakers are expected to last through the end of the year, with the possibility of a memorandum of understanding related to an alliance restructuring signed by next month, sources claim. As you’d expect, no one at Nissan or Renault have anything to say to the media.

Under FCA’s proposal, the 50:50 merger, valued at $35 billion, would mean the creation of the world’s third-largest auto company and potentially lead to $5.6 billion in annual efficiencies, or so FCA claimed. The Italian-American company’s chairman, John Elkann, would reprise his role, with Renault CEO Jean-Dominique Senard likely serving as CEO. Overseen by an 11-member board, the new entity would be structured through a Dutch holding company.

[Image: Fiat Chrysler Automobiles]

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26 Comments on “Crawling Back? Renault Still Eager to Merge With Fiat Chrysler, Report Claims...”

  • avatar

    That merger would further suck the life out of the American operations which is what FIAT has been doing all along.

    FIAT has wasted $BILLIONS of JEEP and pickup profits trying to build dead brand Alfa and should be dead FIAT.

    To add Renault and Nissan to the mix would be a catastrophe – but a certain Italian family seems to want to cash out of the FIAT mess and seemingly strip mine the company of value.

    What a mess.

  • avatar

    AMC is dead. Long live the AMC curse!

  • avatar

    Step 1: Renault sells their portion of Nissan to Ford (and Nissan unwinds their ownership stake in Renault).

    Step 2: Renault-Mitsubishi and FCA proceed with their merger.

    The Ford and Nissan product portfolios would mesh relatively well.

    • 0 avatar
      Art Vandelay

      I’m not sure any merger partners want to touch Nissan right now, lest their execs find themselves in Japanese jail because the Nissan types aren’t fan of the company’s direction.

      Ford could just keep making their own dated cars…why would they buy another company with a dated portfolio. Ford’s Crossovers, EchoSport excluded are arguably better and newer. Their pickups are light-years better. This merger makes no sense from Ford’s perspective.

    • 0 avatar
      87 Morgan

      Tool Guy. I believe Ford has made their decision as to who their international partner is going to be; VAG.

  • avatar

    Tie to rocks together so they can sink to the bottom faster.

    The only company I look at that would merge with FCA where it makes sense in Hyundai/Kia. They have complementary offerings.

    Subaru isn’t big enough – but a Fuji Heavy Industries merger with FCA would create an offroad juggernaut.

    • 0 avatar
      James Charles

      You are only seeing the merge from a NA perspective. Remember the 80%+ of the market that Renault/Nissan operate in is not the US.

      It seems that the Japanese (not Korean) and Big 3 do okay having vehicle manufacturing in developing nations like Thailand, Mexico, etc. EU and US/Canadian manufacturing isn’t doing as well, plus the overall vehicle quality is not competitive on the global stage. FCA’s most profitable vehicles are heavily protected by high (25%) import tariffs and they are heavily reliant on the US market.

      Hyundai/Kia could use FCA, but it will only be of value in a 20% US market. FCA’s price needs to be firesale like so the less than stellar parts of FCA can be sold off or left to rot to make it attractive to Hyundai/Kia.

      If FCA breakdown and sell off the non performing parts the outcome will be a profitable US segment highly exposed and reliant on protectionism of pickups and larger vehicles.

      I believe Nissan should weather this out and separate itself from Renault. The US market is in a bubble like situation with a massive rise in transaction prices. This will end soon and the manufacturers that have been dumping the smaller vehicles will be left in the cold. Nissan with its pricing will be able to profit (as well as Mitsubishi, Hyundai/Kia).

      • 0 avatar

        James Charles,

        Commendations to you for your:
        – Clairvoyance (can immediately and completely understand all the perspective behind anyone’s comment)
        – Prescience (month and year the bubble will end, please?)
        – Omniscience (speaks for itself)

        • 0 avatar
          James Charles

          I see the next 5 to 10 years a make or break for global auto manufacturers.

          I think Asian manufacturers are best placed for the future. EU (read German) are quite well placed, especially with their prestige vehicles. UK lost out with its Brexit BS. Volvo has a lot of Chinese support, so it will be made to succeed.

          The Big 3, well they are slowly becoming regional players in a protected Juraisic Park US vehicle market. When the dung hits the fan, the US market will be wanting more affordable vehicles …… imports.

          Nissan can still use its global presence to pick itself up. Look at VW, not big in the US, but a huge global player.

          • 0 avatar
            Peter Gazis

            James Charles

            Dream On! When the market gets tired of boring Crossovers. The backlash will be towards exciting sports cars.

            The dung is hitting the fan right now. Nissan & Mazda are covered in it.

          • 0 avatar
            James Charles

            I don’t know if you understood my comment.

            Crossovers are popular and they are making a buck. I would hazard to guess the Big 3 are making far more money from protected pickups and the pickup based SUVs than Crossovers.

            Also crossovers are a global fashion, not US centric and they are not protected by a 25% import tariff like pickups. There are only a few manufacturers of BOF full size SUVs outside of the US and the global SUVs are real 4x4s, not modified pickups, so more expensive.

            As you can see Crossovers face a much bigger challenge than protected pickups and their related 4×4 wagons.

            I discussed transaction prices in the US. When the transaction prices drops this will mean;
            a. Crossover customers downsize to fit into their budget or purchase a different style of vehicle, ie wagon or minivan.

            b. Customers buying cheaper Crossovers increases the likeleyhood of them buying an import over a local (Big 3) Crossover as the globe has the taste for Crossovers, smaller ones.

            c. This means Crossover pricing will become as competitive as car prices were, soon due to greater global competition and Crossovers lack a protective 25% import tariff. Whilst the 25% import tariff on pickups remain they will be able to price themselves 24.9% above global competition and remain competitive (at the expense of the consumer).

            d. Large middling quality Crossovers will remain primarily a US thing, as large global Crossovers are generally from a reputable German manufacturer (many are made in the US anyway).

            e. Global Crossovers and AWD wagon thing (some call these SUVs, to me a SUV need 4 hi and lo) are mostly small, think RAV 4 and smaller. But their is a significant market for medium size BOF 4×4 SUVs and those AWD wagon things like a Highlander (Kluger in Oz).

            So, I understand where you are coming from but there are other variables and factors that you need to account. Thanks for your feedback.

      • 0 avatar

        NISSAN should merge with Lagonda and offer bangle butt variable compression CVT’s.

        With liquid crystal displays and blaupunkt controls AND Lucas electronics for adequate 6.5l horsepower.

      • 0 avatar
        87 Morgan

        James Charles…

        I applaud your Nissan optimism. Their is a way a for them to weather this current storm, which is in the very beginnings I believe. They have months of ahead of them of slow sales, Infiniti stores will be extremely hard hit as their new car sales are abysmal. One of the two Infiniti stores in my state reported sales in June of 19 units (new and used!). I won’t have an update on July sales until the 15th of this month but I do not expect the figures to be any better.

        If we are prognosticating, I suspect dealers will start taking legal action in earnest starting the 2nd quarter of 2020 for various claims of mismanagement, building requirements for dealers, shoddy product and denied warranty claims (CVT). The big dealer groups that own Nissan stores are not pleased with the lack of profitability of their stores along with the diminished value of the brand. You can buy a Nissan store now for free, just pay for the inventory and parts and either rent or buy the building and dirt. The Nissan sign is worthless.

        • 0 avatar
          James Charles

          87 Morgan,
          Nissan is in a spot of bother and I see the US mainly as the country where Nissan went cheapest, just to find volume.

          Infinity is very much a US thing as Infinity has done poorly globally.

          In the US Nissan and Mitsubishi need to team up and have joint sale yards to cut costs.

          Nissan has its work cut out, but globally I think Nissan can do better more easily.

          Just look at Nissan’s US pickup lineup, what a woeful mess. An out of date Frontier and a halfass fullsize. Nissan could have the latest Navara ……. 3 or 4 years ago, but there is a thing called the Chicken tax. The Titan was a poor attempt with little effort to produce a competitive product ….. an ex Ram boss screwed that up. What’s funny Ram has leapt forward since he went to Nissan.

          Nissan globally has a BOF Navara wagon, which could be sold in more markets including the US.

          Nissan down rated the Patrol for the US market and globally doesn’t have a diesel for it.

          I don’t see much wrong with Nissan CUVs and those AWD wagon things (some call SUVs).

          Nissan need performance vehicle refresh.

          In all Nissan has lacked the innovation to maintain their attraction. Nissan found itself going down the same path as Mitsubishi.

          Nissan can fix this ….. with some money.

          • 0 avatar

            @BAFO/James Charles/Big Al – You call the Nissan Titan “halfass” and the Frontier “outdated” as the reasons for their “woeful” mess, even though the “chicken tax” which you brought up 5X in a single thread, “protects” them just as much as the successful, highly profitable pickups in the US market.

            But as always, you cannot articulate a specific global pickup, not even one (1) “The Big 3” pickups are protected from.

            Still your Chicken Tax Crusade rolls on, like a runaway freight train and you never miss an opportunity to slide the chicken tax into a thread or article, even when way off topic.

  • avatar

    Same program as FCA had under Marchionne: keep buzz alive about a buyout to support the price of the stock.

    Meanwhile, due to the continuing trade war with China, FCA can probably forget about floating a Chinese buyout rumor, like the one about Haval a couple years ago.

  • avatar

    Aren’t most Jeep riding on a Fiat derived chassis. If this is true then Jeep really does not exist as an American brand.

  • avatar
    Jeff S

    Nissan should shed itself of Renault and not merge with anyone. It would be a mistake for Ford to buy any ownership in Nissan or anyone else. For FCA Jeep and Ram are keeping them afloat and Alfa, Chrysler, and Dodge should just be allowed to die. I don’t see any good that will come from a FCA Renault merger. If Renault were to merge with FCA it would make sense to keep both Ram and Jeep and not interfere with either of them with the rest of FCA sent to the scrap heap.

  • avatar
    Michael S6

    War of the roses #3

  • avatar
    Jeff S

    War of the Roses or the Game of Thrones.

  • avatar

    Why has it become so prohibitively expensive to build cars that mega giants have to unite with other mega giants?

    • 0 avatar

      Because Marchionne said so.

    • 0 avatar

      There’s massive overcapacity in the industry, and mergers provide cover for those mentioned “efficiencies” – shutting down excess assembly, engine, transmission, and parts plants. Without a merger, companies face too many political and public relations hurdles that prevent them from slimming down, short of bleeding red ink.

  • avatar

    Renault used to book over $500 million annually in dividends from its 43% holding of Nissan. Who’d want to give that up?

    But then Nissan got Ghosn in trouble and all of a sudden, its profits in Qtrs 1 and 2 in 2019 vanished into thin air as well. So no juicy dividends going to Renault any more. Coincidence?

    Nissan is perfectly capable of ruining itself by itself, new Versas notwithstanding, and perhaps it really is struggling, but going essentially profitless is a great way to get your majority stakeholder off your back and looking for better opportunities elsewhere. It’s a cunning plan that may result in Nissan slitting its own throat before it recovers and sees it itself for what it really is – a second tier automotive company but independent enough to be proud of its mediocrity.

    • 0 avatar

      Committing seppuku is the most honorable way to get off the stranglehold of mean Gaijins. As Mark would say:

      I can feel the hand of a stranger
      And it’s tightening around my throat
      Heaven help me, Heaven help me
      Take this stranger from my boat.

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