Fiat Chrysler and Renault considering operational tie-up
A news outlet reports that Fiat Chrysler and Renault are in the final stages of announcing an operational tie-up. This could be the first step towards a full-fledged merger between the two companies. This deal doesn't include Renault's alliance partners Nissan and Mitsubishi.
The deal could begin with an exchange of equity, although a final decision will be made once Renault executives meet on July 27. FCA has conditioned the deal on Renault not holding merger talks with Nissan, but the French companies alliance partners could be invited to be a part of this coalition at a later date. In the combined FCA-Renault, Exor NV would become the largest investor. Exor is the investment arm of the Agnelli family, Fiat's founders. Fiat Chairman John Elkann, will become chairman of the merged company, while Renault Chairman Jean-Dominique Senard will be CEO.
The rationale behind this move is quite clear. car sales are dropping across established markets like the US, Europe and China. Further, companies are having to invest heavily on new tech like EVs and autonomous driving in the face of changing global trends. This impact will be greatly reduced when collaborations like this happen. Numerous car makers are already working together to this end. Further, this particular deal will give both brands a very strong presence in Europe. Renault will get access to North America while FCA will gain in Russia, via Renault's Avtovaz.
Together the two entities made 8.7 million cars last year. This would put them in third place behind Toyota and Volkswagen.
Source: Bloomberg