Imagine if Fiat-Chrysler Automobiles and Renault had a full merger. The two large companies could reshape the global automotive industry and possibly become the world's third-largest automaker, behind Volkswagen and Toyota. Soon, however, Fiat-Chrysler-Renault could become a real thing. The Italian-American company has announced their proposal to tie-up with the French automaker, which could eventually lead to a full merger.
FCA has delivered a non-binding letter to the Board of Groupe Renault proposing a combination of their respective businesses as a 50/50 merger. There, Fiat-Chrysler has outlined a deal of sharing technology, intellectual property, and even plans to develop and manufacture vehicles already. Should Renault accept, FCA believes that this will allow them to offer a full range of vehicle, from entry-level, all the way up to the higher-end of the luxury market.
The talks between Renault and FCA are said to have come from pressure on automakers by legislators to electrify and reduce fleet emissions. Rather than developing their very own hybrid and EV models, the two automakers could share platforms and even co-develop new technology that will be applied in future models. This would, in turn, benefit both automakers with huge savings, especially FCA who has been slower to invest in developing electric vehicles.
Aside from reduced costs, both automakers would be able to have improved their market share in areas such as North America and China for Renault and Fiat-Chrysler in Europe.
For now, there is no mention whether Renault's current partners, Nissan and Mitsubishi, will be included in the possible FCA merger. FCA isn't jumping the gun yet either. In their statement, it said 'there is no certainty that this proposal will result in a transaction'. Nonetheless, Fiat-Chysler has made their intentions very public. All that's needed now is Renault's response to the Italian-American automaker.
Should the tie-up include Nissan and Mitsubishi, it could vault the group as the number 1 global automaker. However, with the Carlos Ghosn drama still fresh, everything is still up in the air. One thing for certain is that if this partnership takes place, it will be big news for the global automotive industry.