So Fiat Chrysler and Renault might be merging. That’s exciting, right?
Before we start busting out the champaign and ticker tape parade, first let’s all understand this is just a proposal for a merger coming from FCA. Renault still has to agree to it in order for it to happen, and since the government of France is a partial owner of Renault and has already shot down a merger between Nissan and Renault (two companies already as deep into each other’s business as you can get), there’s a strong possibility that France will shoot this merger down too.
But they might not, and that’s pretty exciting.
The proposal comes after a weekend of intense rumors that Fiat and Renault were about to go public on their proposed joining. Like a couple announcing their engagement, Fiat Chrysler released a statement on Monday saying they’ve sent a proposal to Renault for a merger that would see shareholders take on a 50/50 split of the combined company.
If Renault and Fiat Chrysler were to combine officially, they’d become the 3rd largest automaker in the world.
FCA says in their release that no plant closures would arise as part of the merger, but FCA and Renault could experience as much as $5.6 billion in annual synergies from combining their fleets, engines, and powertrains under a single roof.
Those fleets would also compliment each other extremely well, with FCA bringing strong North American brands like Jeep, Ram, and Dodge to the table, while Renault has a lock on entry-level vehicles in Europe, Russia, Africa, and the Middle East.
Combined, the two companies would sell 8.7 million vehicles annually.
Renault is already part of the Renault-Nissan-Mitsubishi alliance and shares technology with both Japanese carmakers, and the proposed merger would bring FCA into the mix. Nissan and Mitsubishi are expected to enjoy synergistic savings of just over $1 billion USD as a result of access to FCA’s technologies and powertrains.
However, there’s still no guarantee that such a merger will go through. As we mentioned, the French government is very protective of its national companies, and it doesn’t get more French than Renault. But on the other hand, both Renault and Fiat Chrysler would hugely benefit from the deal. Even a country like France can see the potential financial gain from a merged company.