In a deal that would create a new third-ranked global car manufacturer, Fiat Chrysler Automobiles (FCA) has made a “transformative” merger proposal to Renault. The deal would create a carmaker selling 8.7 million vehicles annually with a strong presence across key regions, automotive markets and technologies and generate $5.6bn in estimated annual savings, Reuters has reported..
If successful, the tie-up would alter the competitive landscape for rival carmakers from General Motors to Peugeot maker PSA Group, which recently held its own inconclusive talks with FCA. The FCA-Renault plan would see the two carmakers merged under a listed Dutch holding company. After payment of a EUR2.5bn dividend to current FCA shareholders, each investor group would receive 50 per cent of stock in the new company.
Pressure for consolidation among carmakers has grown with challenges posed by electrification, tightening emissions regulations and expensive new technologies being developed for connected and autonomous vehicles. “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,” FCA said. The French government, Renault’s biggest shareholder with a 15 per cent stake, supports the merger in principle but will need to see more details, a spokesperson said.