Fiat Chrysler proposes 50-50 merger with Renault

Fiat Chrysler proposes 50-50 merger with Renault

Fiat Chrysler Cars has proposed merging its enterprise with Renault that, if accepted, would create the third largest international automaker with eight.7 million in annual automobile gross sales.

FCA delivered Monday a non-binding letter to Renault’s board that proposes combining the enterprise as a 50-50 merger. FCA’s proposal illustrates the rising need amongst automakers to consolidate, or type partnerships, in an atmosphere of accelerating regulatory strain, declining gross sales and rising prices related to next-generation applied sciences akin to autonomous automobile expertise.

Underneath the proposal, the mixed companies could be cut up equally between FCA and Renault shareholders. The board could be a mixed entity of 11 members, FCA mentioned. The bulk could be impartial. FCA and Renault would get equal symbolize with 4 members every in addition to one nominee from Nissan. The dad or mum firm could be listed on the Borsa Italiana in Milan, Euronext in Paris and the New York Inventory Alternate.

French automaker Renault has an alliance with Nissan Motor. The 2 corporations, whose relationship has develop into confused within the fallout over the arrest of former Renault-Nissan Alliance CEO Carlos Ghosn and subsequent energy battle, share automobile elements and collaborate on expertise. Renault owns 43.four p.c of Nissan. Nissan owns 15 p.c of Renault.

Fiat Chrysler is finest identified in U.S. for the corporate behind the Jeep and Ram vans. However its enterprise is way bigger. Fiat, which has a market worth of $20 billion, can be one among Italy’s oldest corporations and owns manufacturers like Alfa Romeo, Fiat, Lancia, and Maserati.

Fiat acquired a stake in Chrysler in 2009. The FCA individuals know as we speak — which employs practically 200,000 individuals — was created when the businesses merged in 2014.

The proposed merger would lead to value financial savings. Nevertheless, FCA insists it will not come from plant closures. No factories would shut because of the merger, FCA mentioned in its proposal. In a launch describing the proposal FCA states:

The advantages of the proposed transaction will not be predicated on plant closures, however could be achieved by means of extra capital environment friendly funding in widespread international automobile platforms, architectures, powertrains and applied sciences.

The mixed corporations would understand greater than 5 billion euros in estimated annual run charge financial savings by collaborating on merchandise and in sure areas, notably relating to the event and commercialize of latest applied sciences. FCA famous that these areas included connectivity, electrification and autonomous driving.

FCA argued that’s has a historical past of “efficiently combining OEMs with disparate cultures to create robust management groups and organizations devoted to a single objective.”

These value financial savings shall be essential for each corporations if there’s a downturn in gross sales — a actuality that different automakers like GM and Ford are already getting ready for. It could additionally permit the businesses to pursue applied sciences akin to superior driver help techniques and autonomous automobiles.

FCA, which operates 46 analysis and growth facilities, has invested in superior driver help techniques like its freeway help characteristic provided in its Maserati model. It has additionally relied on partnerships such because the one with self-driving automobile firm Waymo .

Final 12 months, the corporate introduced an expanded partnership with Waymo that may add as much as 62,000 extra Chrysler  Pacifica minivans to Waymo’s self-driving automobile fleet. The 2 corporations are additionally engaged on methods to license Waymo’s self-driving automobile expertise with a purpose to deploy the tech in vehicles for shoppers.

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