FCA-Renault agreement to be announced Monday

Fiat Chrysler Automobiles and French automaker Renault are in talks for a global partnership and details could be known as early as Monday, a source said Sunday.

Reports that the two builders would have had talks about a possible rapprochement that began in earnest on Saturday, with a source informing the free press that the talks had "accelerated" and took hold all day long. Sunday.

Neither FCA nor Renault commented publicly.

Various media had also indicated that an agreement would pave the way for a possible Renault alliance with Nissan and Mitsubishi at a later date.

A connection of this magnitude would recreate the global automotive industry.

Any deal between FCA and Renault would not affect US operations or expansion plans, a source said. FCA has its US headquarters in Auburn Hills and is planning a massive expansion of its manufacturing operations in the eastern part of Detroit.

Persistent fusion discussion

The news of an agreement, if it were to materialize, would seem to answer the recurring questions about possible candidates for the merger for FCA. In recent years, the company has generally decided to focus on producing SUVs and trucks over traditional cars.

Renault would offer the company a chance to strengthen its references in electric vehicles at a time when it is becoming increasingly important, especially in Europe.

Michelle Krebs, Senior Analyst at Autotrader of Cox Automotive, highlighted FCA's long-standing focus on the benefits of consolidation.

"This is something Sergio Marchionne has talked about for a long time, that the industry needs to consolidate, waste a lot of money" for every company that pursues technological development, said Krebs, referring to the latest CEO of FCA.

Krebs noted that the two companies had different footprints and that Renault was no longer present in the United States, where FCA derived most of its profits from its Jeep and Ram truck brands.

She also offered words of caution.

"Both manufacturers need to be very careful – they both experienced a combination of operations that did not go very well," Krebs said. "Although things look good on paper, with complementary operations and footprints … it's often a matter of merging cultures, and it's a difficult task that does not always have been successful and both companies have experienced it. "

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Krebs pointed to Chrysler's "peer-to-peer" merger with Daimler-Benz, which was actually an acquisition of the German company, and Renault's current relations with Nissan and Mitsubishi, which had been put to the Japan's trial against the eviction and criminal charges against its former leader, Carlos Ghosn, who denied committing wrongdoing.

Room of cards?

Jon Gabrielsen, market analyst and automotive consultant, was more direct, saying he saw nothing positive in such an agreement.

"It sounds like the perfect recipe for a house of cards that will inevitably collapse over time. Take the tense relationship between Renault and Nissan, which would have been maintained only by the determination and charisma of Carlos (Ghosn). Remove the adhesive from Carlos (Ghosn), add Mitsubishi, and then Fiat Chrysler, said Gabrielsen. This is a colossal collage, with five distinct corporate cultures (Renault, Nissan, Mitsubishi, Fiat and Chrysler of origin) with four major cultures of distinct and very different countries (French, Japanese, Italian and American) are then superimposed on an inevitable worldwide slowdown. In the meantime, I do not see any benefits, at least for the part of the deal with Chrysler. "

Gabrielsen remarked that "if you can not ensure that the entire cultural organization dances in perfect harmony, it is irrelevant that any combination is brilliant on paper for a combination of financial stocks or market hedging. and actions, the beast will be destroyed from within. "

However, Sam Fiorani, vice president of global vehicle forecasting for AutoForecast Solutions, offered a different perspective when the possibility of a merger with Renault-Nissan (or the PSA group in France) was raised in April.

"South America is the only obvious overlap between FCA and one or the other of the potential partners, but elsewhere … they would form a powerful team." Renault and Peugeot-Citroen-Opel control Europe much more completely than Fiat / Lancia The global reach of Renault-Nissan and the strength surpasses that of the PSA Group, but either claimant would make (a) an excellent partner for FCA ", then told Fiorani Free Press. "The FCA has only a few strengths and weaknesses – overall, Jeep is the highlight of the FCA family – Ram and minivans are well established in North America, while Fiat resists in North America. South and Italy. "

Contact Eric D. Lawrence: [email protected]. Follow him on Twitter: @_ericdlawrence.

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