Fiat Chrysler withdraws from Renault

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Reuters

Fiat Chrysler has withdrawn its proposed merger of French automaker Renault, announced the Italian-American group.

This announcement followed an unsuccessful attempt by Renault's board members to comment on the offer.

Renault said it failed to reach an agreement because representatives of the French government had asked for a postponement.

The French government is Renault's main shareholder, with a stake of more than 15%.

The Japanese company Nissan also holds a 15% stake in Renault, while Renault holds a 43.4% stake in Nissan.

Fiat Chrysler made this offer to Renault at the end of last month, describing it as a "transformative" proposition that would create a global leader in the automobile.

Car manufacturers have had to face pressure to regroup in the face of major changes in the sector, particularly electric vehicles.

"It has become clear that the political conditions in France do not exist at the moment for such a combination to unfold successfully," Fiat Chrysler said in a statement.

But he said he remained "firmly convinced of the imperative transformation logic" of the proposal, whose terms were "carefully weighed to provide substantial benefits to all parties".

Difficult times

The shift towards electric models, combined with tighter emission standards and the development of new technologies for autonomous vehicles, has put increasing pressure on car manufacturers for them to consolidate.

Older carmakers, often heavily indebted, are also facing growing competition from new players in the automotive sector, including Tesla, as well as cash-rich companies developing driverless technologies such as Amazon and Waymo, a company from Google.

The combination of Fiat Chrysler with Renault would have allowed companies to share the costs of developing key technologies such as electric vehicles and autonomous cars and to create a major player in the automotive industry.

The merger proposal was made at a time when Renault had already faced challenges in the context of an alliance with the Japanese Nissan.

Former Renault and Nissan general manager Carlos Ghosn is awaiting trial following his fourth arrest in Japan, during allegations of financial misconduct.

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The charges have hurt the 20-year-old alliance, which also includes the Japanese Mitsubishi Motors.