Fiat Chrysler Proposes Merger With Renault

The combined company is poised to become a leader in the race for developing electric and autonomous vehicles.
Fiat Chrysler Proposes Merger With Renault

Fiat Chrysler has proposed a merger with Renault to create the world’s third-largest automaker, giving the two companies the ability to take the lead in the race to develop new electric and autonomous vehicles.

Renault’s board of directors met Monday at its headquarters outside Paris to discuss the proposal and announced afterward that Renault will study it “with interest.”

The aim is “to identify products and geographies where they could collaborate, particularly as they develop and commercialize new technologies,” in order to improve capital efficiency and the speed of future product development. In a statement issued from London, Renault said, “the case for combination is also strengthened by the need to take bold decisions to capture at scale the opportunities created by the transformation of the auto industry in areas like connectivity, electrification, and autonomous driving.”

A Better Way to Do Ecommerce

A Better Way to Do Ecommerce

Learn how Precision Medical leveraged OneWorld to cut the cost of billing in half and added $2.5M in annual revenue.

Shares of both companies jumped more than 10% on the news of the offer, which would see each side’s shareholders split ownership in the new manufacturer.

A deal would save 5 billion euros ($5.6 billion) for the merged companies each year by sharing research, purchasing costs, and other activities, Fiat Chrysler said in the statement.

The merged company would also reshape the global industry by making some 8.7 million vehicles a year, putting it ahead of General Motors and trailing behind only Volkswagen and Toyota.

The combined business would be a world leader in electric vehicle technologies, premium brands, SUVs, pickup trucks, and light commercial vehicles, according to the statement, and “would have a broader and more balanced global presence than either company on a standalone basis.”

The deal would involve no plant closures, “but would be achieved through more capital efficient investment in common global vehicle platforms, architectures, powertrains, and technologies.”

While potential job cuts were not addressed, the statement said that “this combination, which would have the scale, expertise, and resources to navigate the rapidly changing automobile industry, would create new opportunities for employees of both companies and for other key stakeholders.”

The companies are largely complementary: Fiat Chrysler is stronger in the U.S. and SUV markets, while Renault is stronger in Europe and on electric vehicle developments. Together, they would be worth almost 40 billion euros ($44.7 billion).

Understanding Which ERP Modules Your Business Needs – And When