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Fiat / Chrysler partnership with Renault / Nissan surpbades rumors
"We are going in an environment where there will be opportunities," said Mike Manley, Fiat-Chrysler CEO.
A merger between auto giants Renault and Fiat-Chrysler could be announced at any time as talks are gaining momentum, industry sources said on Sunday.
In Paris, a meeting of the Renault Board of Directors is scheduled for Monday at 8:00 am (06:00 GMT). The major partnership currently in force between Renault and the Japanese Nissan, in which it holds 43%. Nissan in turn holds 15% of its French partner Renault, but the imbalance in this relationship has resulted in friction, as evidenced by the arrest of former Renault and Nissan head Carlos Ghosn in Tokyo .
The CEOs of both manufacturers have made it clear that they are open to partnerships to further reduce manufacturing and vehicle development costs. This decision could be particularly beneficial in Europe, where motor vehicle sales are generally under pressure. Working together could also allow both companies to close factories.
In the last earnings call for Fiat Chrysler, CEO Mike Manley was asked about the possibility of merging with another manufacturer. "We have made it clear in the past that we want to be active and proactive in developing our business and improving value for our shareholders," said Manley. "We are going in an environment where there will be opportunities," he added. This represented a change of mentality in January, when he was convinced that Fiat Chrysler no longer needed a merger or alliance. his predecessor had actively sought.
The Financial Times and the Wall Street Journal have recently announced an agreement that could include Renault and Fiat Chrysler "joining a large part of their business," while a more cautious New York Times said the talks were still at their debut, and "could still collapse."
The Financial Times, citing several people informed of the talks, said: "This deal could eventually bring the automaker (Fiat-Chrysler) to join the Renault-Nissan-Mitsubishi alliance in the future", if the big Japanese automaker Nissan could be conquered. Earlier this year, rumors circulated that Renault would be interested in Fiat-Chrysler after its hopes of a total merger with Nissan or even its French rival PSA were wiped out. Such an alliance would become the largest in the world, a title between Renault-Nissan-Mitsubishi and German Volkswagen.
After his arrest, Ghosn was released on bail for the second time on April 25 and is now preparing for his trial for four counts of financial misconduct, ranging from concealment of part of his salary to the Use of Nissan funds for personal expenses.
Under Ghosn, Renault was increasingly interested in a complete merger with Nissan, its partner in an alliance with mixed results. When the two manufacturers formed their alliance in the late 1990s, this combination helped Nissan reduce its losses and become an extremely profitable builder. Other badysts say today that Renault, the dominant player in the alliance, needs to continue to make its financial contribution to Renault, the performance of the French manufacturer sliding in Europe.
A partnership between Fiat Chrysler and Renault would also help builders pool their resources for the development of electric and autonomous vehicles. Renault's EV program is considered more advanced than that of Fiat Chrysler, but neither company is considered a leader in electric vehicles.
Ford Motor and Volkswagen have recently agreed to work together in commercial vans and vans and are discussing the possibility of combining their efforts to develop autonomous cars.
In Europe, Fiat Chrysler and Renault are facing stricter environmental regulations that require automakers to invest billions of dollars in electric vehicles and other new technologies to reduce emissions. The two countries are also struggling to gain ground in China, the largest auto market in the world, and have taken longer than some competitors to develop autonomous vehicles.
An alliance with Fiat Chrysler would give Renault access to the US market, where it is currently not present.
In 2015, Sergio Marchionne, then boss of Fiat-Chrysler, had publicly proposed to badociate with General Motors. The company was also considering the possibility of establishing links with Chinese companies. But since then, the growing sales of pickup trucks and Jeeps have strengthened its coffers. In recent months, vehicle sales have slowed and Fiat Chrysler's net profit fell 47% in the first quarter to 508 million euros.
The new president of Renault, Jean-Dominique Senard, proposed this month to merge the French manufacturer with Nissan in a holding, evoking a fierce competition of electric vehicles and emerging technologies, as well as headwinds on the main group markets.
The proposal, which was pbaded to Nissan in camera but was leaked to the Japanese media, was completely rejected by Nissan CEO Hiroto Saikawa, who has long opposed the idea. It sought to reshape the balance of power of the alliance, in which Renault holds 43% stake in Nissan, while Nissan holds 15% stake in Renault without voting rights – a decision that Renault opposed.
But the pressure for a rapprochement has intensified while Nissan's performance is at the rendezvous. This month, Nissan has announced a 45% decline in operating profits over the past year and has announced a drop of nearly 30% this year. Renault officials are deeply concerned about Nissan's performance and see the merger as an essential step in strengthening the alliance.
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