FCA has requested a merger with Renault
Posted on June 3, 2019
Fiat Chrysler Automobiles formally requested a 50/50 merger with French automaker Renault last week. If it went ahead, it would create the third largest automaker in the world and would give both companies a huge boost in market share, economies of scale and development resources.
Nothing has been agreed at the time of writing but Renault said they would look over the proposal and present it to their board. The statement from FCA
is detailed and a long read but essentially says they are presenting the option for a 50/50 split that would cover all areas of the business. It would allow the company to cover most areas of the auto market and could combine forces without the loss of any jobs or closure of any plants.
It is that last that could influence doubters. If the new organization held true to no job losses or closures then it could gain a lot of traction both in the US, Canada and in Europe.
FCA does say that the costs involved in driving electrification, connected cars and autonomous vehicles as its motivation for seeking a merger. Combining forces with an established manufacturer with its own design and R&D resources could help reduce what are expected to be extensive costs.
Mergers are the order of the day right now with automakers recognizing the benefits of joining forces with other companies that can complement their own organization and help develop both brands. The increased costs of faster development cycles, continuous changes in technology and our appetite for the latest innovations means the long development processes of the past are gone.
Consumers demand faster updates, more technology and expect automakers to roll out technology as soon as it becomes available.
A merger between FCA and Renault could be good for both companies. It would give Renault exposure in North American and FCA in Europe. FCA is strong in trucks and SUVs while Renault is strong in sedans. The French company has also invested heavily in electrification and autonomous technologies which could benefit FCA.
Renault has said it will study the proposal and report back once the board and relevant parties have studied the proposal and made their recommendations. These things don’t happen quickly so it is likely to be a couple of months before we hear back.
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