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France To Blame For Scrapped Renault-FCA Merger

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France is taking the blame for the scrapped Renault-FCA merger.

As quickly as it appeared, Fiat Chrysler has now backed away from a proposed merger that would see FCA and French carmaker Renault become the third largest automotive company in the world. Instead, FCA walked away from negotiations when Nissan didn’t provide their full support of the proposed merger.

Following the initial proposal, the government of France--which holds a 15% stake in Renault--made it a condition for their approval that global alliance partner Nissan provide their blessing for the merger. An earlier report from the Wall Street Journal said that two Nissan executives on the Renault board of directors abstained from a vote last Wednesday, which FCA and Renault took as an indication that Nissan might pull out of the global alliance if the merger went through.

Rather than continue negotiations, FCA rescinded their proposal and walked away from the table.

However, Reuters now reports that Nissan’s role in scuppering talks may have been overplayed, and it was in fact France’s intention all along to prevent Renault from merging with FCA. Sources within FCA indicated that French President Emmanuel Macron was looking for a way out of the deal due to political pressures following the announcement of layoffs at a General Electric factory within France.

RELATED: The Merger Between FCA And Renault Has Been Called Off

That said, French officials apparently attempted to resurrect negotiations early Thursday morning by contacting FCA Chairman John Elkann, but to no avail. Fiat’s board had become “exhausted” by the conditions set by the French government, and rather than continue to negotiate decided it was simply not worth their time.

via PSA

Analysts expect FCA to go back on the market soon to seek a new merger, with Peugeot parent company PSA Groupe seeing its stock price rise as a potential candidate. Rumors swirled last March that FCA was courting PSA for another potential merger, but never reached the point of a formal proposal.

Fiat is lagging behind other major carmakers in both electric powertrains and autonomous vehicle software, two categories that are expected to define the future automotive market.

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