Fiat-Chrysler Automobiles (FCA) has spent several years looking for a partner to merge with in order to save money on research and development. Its search may finally be over. The group sent Paris-based Renault a proposal that outlines the terms of what it calls a transformative, 50/50 merger which would create the third-largest automaker in the world. The French firm hasn’t announced whether it will accept the offer yet.
The deal would save both companies a tremendous amount of money without forcing them to take controversial measures like closing factories. In its statement, FCA explained a merger would allow the two automakers to build cars on common underpinnings, to jointly develop technology (notably, but not exclusively, for electric and autonomous vehicles), and to jointly purchase parts and materials from third-partly suppliers. For example, Renault could conceivably replace its pocket-sized Twingo city car (pictured) with a model built using the same hardware and software found under the next-generation Fiat 500 expected to make its debut in 2020. Odds are the two cars would look nothing alike, but they’d use many common parts under the sheet metal.
The point is to save money, not to create a Renault that looks like a Fiat, drives like a Jeep, and sounds like an Alfa Romeo.
FCA’s portfolio of brands includes Chrysler, Jeep, Dodge, Ram, Maserati, Lancia, Fiat, and Alfa Romeo. Renault — which hasn’t sold a car in the United States since 1987 — also owns a Romanian budget brand named Dacia, and it owns stakes in Russia-based Lada, Nissan, and Mitsubishi. The merger would have a tremendous impact on all of these automakers, and it could reshape the pecking order in the automotive industry, but car buyers likely won’t notice the difference. The brands that will end up grouped under the same umbrella will keep their respective identities. The point is to save money, not to create a Renault that looks like a Fiat, drives like a Jeep, and sounds like an Alfa Romeo.
Renault confirmed it received FCA’s proposal. Its top executives are weighing the pros and cons, and they will issue a statement with more information once they have reached a decision. Digital Trends will update this story as more information becomes available. Even if the two automakers agree on a merger, the deal will need to receive the approval of regulators and anti-trust authorities in a number of countries.
The relationship between Renault and long-time partner Nissan have been strained since former CEO Carlos Ghosn was arrested in November 2018. Interestingly, some insiders strongly believe his arrest was a coup orchestrated to prevent him from merging Renault and Nissan. As it stands, FCA claims Nissan and Mitsubishi will benefit from its merger with Renault. In the long run, however, the deal could either deepen the divide between Renault and Nissan by making one side much bigger than the other, or help the companies make amends. Nissan hasn’t commented on the news yet.