May 28, 2019

FCA officially proposes merger with Groupe Renault

The proposed merger would create the third largest global OEM.

FCA officially proposes merger with Groupe Renault
Fiat Chrysler Automobiles (FCA) has delivered a non-binding letter to the Board of Groupe Renault, proposing a 50:50 merger of the two entities. The official announcement comes a day after news of the development broke out. In its announcement, FCA has confirmed the proposal follows prior discussions between the two carmakers on potential areas of collaboration, such as product development, and opportunities in areas like connectivity, electrification and autonomous driving.
The envisaged merged entity would be owned 50 percent by FCA shareholders and 50 percent by Groupe Renault shareholders. The joint annual sales of 8.7 million units would make the merged entity the third largest manufacturer in the world, with a combined presence wider than that of either carmaker. The merger would bring the Fiat, Renault, Jeep, Ram, Dacia, Lada, Maserati and Alfa Romeo brands under the same umbrella. Notably, the proposal also envisages association with Renault’s alliance partners Nissan and Mitsubishi. FCA and Groupe Renault, along with Mitsubishi and Nissan would be the largest manufacturer alliance, selling more than 15 million vehicles annually.
Synergies arising from platform and powertrain sharing aside, there is also scope for cooperation in electrification and autonomous technology, as per FCA’s proposal. Renault’s experience in EV tech would complement FCA’s know-how in autonomous tech gained via partnerships with Waymo, BMW and Aptiv.
Interestingly, the FCA proposal mentions there will be no plant closures but more efficient capital investment. FCA, represented by Fiat and Jeep in India, has a plant at Ranjangaon in Maharashtra, while Renault and Nissan produce cars at a facility in Oragadam, Tamil Nadu. FCA has seen a change in fortunes in India, thanks to the success of the Jeep Compass, but Renault has been struggling of late, with sales on a downturn. FCA’s documents list that ‘the proposed merger would give the entity increased resources to grow its footprint in the Asia Pacific region’.
The proposal is to be reviewed by the Groupe Renault board of directors. 
(This article first appeared on
Campaign India

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