Fiat Chrysler Cars has proposed merging its enterprise with Renault that, if accepted, would create the third largest world automaker with 8.7 million in annual car gross sales.
FCA delivered Monday a non-binding letter to Renault’s board that proposes combining the enterprise as a 50-50 merger. FCA’s proposal illustrates the rising want amongst automakers to consolidate, or type partnerships, in an atmosphere of accelerating regulatory stress, declining gross sales and rising prices related to next-generation applied sciences akin to autonomous car expertise.
Beneath the proposal, the mixed companies could be cut up equally between FCA and Renault shareholders. The board could be a mixed entity of 11 members, FCA mentioned. The bulk could be unbiased. FCA and Renault would get equal symbolize with 4 members every in addition to one nominee from Nissan. The father or mother firm could be listed on the Borsa Italiana in Milan, Euronext in Paris and the New York Inventory Alternate.
French automaker Renault has an alliance with Nissan Motor. The 2 firms, whose relationship has turn out to be harassed within the fallout over the arrest of former Renault-Nissan Alliance CEO Carlos Ghosn and subsequent energy battle, share car components and collaborate on expertise. Renault owns 43.four p.c of Nissan. Nissan owns 15 p.c of Renault.
Fiat Chrysler is greatest identified in U.S. for the corporate behind the Jeep and Ram vans. However its enterprise is much bigger. Fiat, which has a market worth of $20 billion, can be one in all Italy’s oldest firms and owns manufacturers like Alfa Romeo, Fiat, Lancia, and Maserati.
Fiat acquired a stake in Chrysler in 2009. The FCA folks know at this time — which employs practically 200,000 folks — was created when the businesses merged in 2014.
The proposed merger would lead to value financial savings. Nevertheless, FCA insists it might not come from plant closures. No factories would shut on account of the merger, FCA mentioned in its proposal. In a launch describing the proposal FCA states:
The advantages of the proposed transaction aren’t predicated on plant closures, however could be achieved by extra capital environment friendly funding in frequent world car platforms, architectures, powertrains and applied sciences.
The mixed firms would notice greater than 5 billion euros in estimated annual run fee financial savings by collaborating on merchandise and in sure areas, notably on the subject of the event and commercialize of recent applied sciences. FCA famous that these areas included connectivity, electrification and autonomous driving.
FCA argued that’s has a historical past of “successfully combining OEMs with disparate cultures to create strong leadership teams and organizations dedicated to a single purpose.”
These value financial savings will probably be essential for each firms if there’s a downturn in gross sales — a actuality that different automakers like GM and Ford are already making ready for. It will additionally enable the businesses to pursue applied sciences akin to superior driver help methods and autonomous automobiles.
FCA, which operates 46 analysis and growth facilities, has invested in superior driver help methods like its freeway help function supplied in its Maserati model. It has additionally relied on partnerships such because the one with self-driving car firm Waymo .
Final yr, the corporate introduced an expanded partnership with Waymo that may add as much as 62,000 extra Chrysler Pacifica minivans to Waymo’s self-driving automobile fleet. The 2 firms are additionally engaged on methods to license Waymo’s self-driving automobile expertise to be able to deploy the tech in vehicles for customers.