Renault to study Fiat-Chrysler merger offer ‘with interest’

The Renault logo on a vehicle displayed during the International Motor Show Auto 2019 in Riga, Latvia, 13 April 2019 . [Photo: EPA-EFE/TOMS KALNINS]

French carmaker Renault revealed on Monday (27 May) that it will “study with interest” a merger proposal tabled by Fiat-Chrysler which, if approved, would create one of the largest automobile companies in the world.

Media reported on Sunday that a tie-up between Renault and the Italian-US company was in the works, with a view to forming a global partnership aimed at boosting efforts to shift to electric vehicles and develop self-driving cars.

Fiat-Chrysler’s proposal would grant 50% of the new company to both sets of existing shareholders, the Italian-US firm said in a statement and named connectivity, electrification and autonomous driving as the areas that will be targeted.

On Monday morning, Renault’s board said that it would consider the “friendly proposal” and announce a decision whether to press on with talks “in due course”.

The French carmaker will have to take into account a number of considerations, chief among which is an existing partnership with Nissan. Renault owns 43% of the Japanese firm, which in turn has a 15% stake in Renault.

A tie-up between the two companies would displace General Motors as the third-largest carmaker in the world and, taking into account firms associated with the Renault alliance, possibly the largest in terms of the total number of produced cars.

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Fiat Chrysler (FCA) confirmed Sunday (7 April) that it is to pay hundreds of millions of dollars to Tesla, the zero-emissions electric carmakers, to avoid getting hit by European Commission fines.

France’s government also owns a 15% share of Renault and sources told AFP that they will be “vigilant on jobs, the impact on industry as a whole and the national interest”. Its involvement is also set to prompt action from Italy’s government.

A member of Matteo Salvini’s Lega party told LA7 TV that the French government’s involvement is an “anomaly” and suggested that Rome would seek an equal share in whatever new company is formed by the potential merger.

Such manoeuvering between two governments draws parallels with European airline Air France-KLM. In February, the Dutch government announced it was increasing its shares in the company in order to match France’s stake, citing “public interest”.

Dutch increase Air France-KLM stake to counter French influence

The Netherlands announced on Tuesday (26 February) the surprise purchase of a stake in Air France-KLM, saying it needed to protect Dutch interests after a series of rows about the alliance’s management.

There are a number of benefits to the merger on both sides. For Fiat-Chrysler, the alliance would bring valuable know-how on building and marketing electric vehicles, an area in which the company is considered to be a laggard.

In return, Renault could count on lucrative access to the US market, given that the French firm’s line-up of smaller compacts does not clash with Fiat-Chrysler’s offering of larger jeeps and SUVs.

Any mergers that affect the European market are subject to approval by the European Commission’s competition department, which recently came under scrutiny for nixing a proposed tie-up between train-makers Alstom and Siemens.

A Commission spokesperson told EURACTIV that at this stage, the EU executive “cannot speculate on this [the FCA-Renault proposal]” and that “it is always up to the parties to notify transactions”.

[Edited by Zoran Radosavljevic]

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