FCA and Renault are in "advance" talks to partner,with CTC having more power than all of Nissan

[James.A]

Could this news lead to further delays of large cars and jeeps etc?

 

[Cody's Car Conundrum]

Could this news lead to further delays of large cars and jeeps etc?

Good question (no sarcasm). I've done some reading up on this subject and three things are becoming more apparent:

1: This looks like more of an FCA-Renault deal than an FCA-Renault-Nissan-Mitsubishi deal.

2: While I thought Fiat and Renault would be at odds, that might not be the case. Fiat (in Europe) sells the 500 and Panda in huge numbers (I don't remember the segments exactly but Reno don't do as well there). Renault does much better in the bigger segments though, specifically with the Megane and Clio.

3: They would get more money from Renaults sales, the increased cash flow might be directed to the development of some next-gen cars, and they would also get access to other platforms/resources in segments FCA (U.S.) doesn't have cars in. The Megane, Clio, etc. <- That's important.

It's not certain that FCA would use the extra money from Renault sales for development of their own cars (or if Reno would agree with that), but as long as the possibility is there then I'm good with that. On the platform/resource side, imagine if FCA and Reno made a combined effort to make a next-gen Renegade, 500X, and Captur. That would drop the cost to make newer-gen versions of all three, and both companies could benefit from the (potential) profits of those vehicles selling in markets they weren't before. Or in FCA's case, selling markets with higher sales than before.

For the third part, they might just get the increased cash-flow and some resources from Renault. No Renault platforms and little of their resources, but more money. That's not my favorite outcome, but still a plus nonetheless.

This merger may delay future product if FCA/Renault decides to add or send some engineers to a certain project. Or if, like Toyota and BMW, they need to figure out how to work together for the first few years. Especially if they do this while working on an actual product. Worse still, if they do this while working on a product that's already well into the development phase.

 

[Mopar426]

Could this news lead to further delays of large cars and jeeps etc?

There are no synergies with Dodge, Ram or Jeep - this is a life line to Fiat I am afraid and maybe some rebadged Chryslers that nobody will touch, which I am sure they are already aware of. All I see is an attempt to offload FCA here.

 

[James.A]

There are no synergies with Dodge, Ram or Jeep - this is a life line to Fiat I am afraid and maybe some rebadged Chryslers that nobody will touch, which I am sure they are already aware of. All I see is an attempt to offload FCA here.

Thats interesting and it makes sense.

 

[Freshforged]

Most likely they will not return Renault back to US. But Renault is strong in Europe, Russia, North Africa and South America. FCA or FCRA would become very strong with addition on Renault.
Also they could put more pressure on Nissan on total acquisition or maybe a buy out. Nissan is strong in some markets where both FCA and Renault are weak.

So yes, this could be a dream merger but only if Exor take over control.

That’s is reassuring. Hopefully the difficulties of establishing Fiat in the US will make them think twice. Not that I think Fiat needs to go away, I’d still like to see them survive here as a niche compact vehicle brand.

 

[Cody's Car Conundrum]

There are no synergies with Dodge, Ram or Jeep - this is a life line to Fiat I am afraid and maybe some rebadged Chryslers that nobody will touch, which I am sure they are already aware of. All I see is an attempt to offload FCA here.

I'm not so sure about that.

Let's consider this: In the event that the Renegade, 500X, Tonale (which I forgot), and the Captur all get a next-gen version (and are all developed together), Jeep and Alfa won't have a problem differentiating their cars from the Renault version. The Jeep will still be off-road oriented and the Alfa Romeo will be the most luxurious and probably the best to drive. More likely than not, that leaves the Renault with being the best value, a place the 500X could also occupy. However, the Captur would be in the way, that leaves the 500X with being the least expensive. Which could quickly become a slippery slope into becoming the cheapest (in a bad way).

All four vehicles (Renegade, Captur, Tonale, and 500X) are sold in Europe too. So it's not like the 500X can occupy the Renegade's space. Perhaps the 500X could be like a less expensive Tonale, but Fiat needs a stronger brand vision than just selling less expensive cars with the same attributes.

In the event that more platforms are developed where there are a Fiat and a Renault (and at least one other brand), Fiat might find itself struggling to establish what it's model is when compared to its siblings. Too much of that and Fiat might be in trouble.

 

[AlexB]

There are no synergies with Dodge, Ram or Jeep - this is a life line to Fiat I am afraid and maybe some rebadged Chryslers that nobody will touch, which I am sure they are already aware of. All I see is an attempt to offload FCA here.

You do realize FCA is the surviving automaker as Renault is not based in the Netherlands. The French is taking a 75% cut in voting power down to 7.5% of FCA.
Renault is way more of International Automaker than PSA.

 

[Bili]

You do realize FCA is the surviving automaker as Renault is not based in the Netherlands. The French is taking a 75% cut in voting power down to 7.5% of FCA.
Renault is way more of International Automaker than PSA.

Not only that. PSA is family controlled while Renault isn't. This leaves Exor at the top of a new company.

 

[Bili]

An FCA-Renault merger would bring Elkann out of Marchionne's shadow

If Fiat Chrysler merges with Renault to create the world's third-largest automaker, FCA Chairman John Elkann will have delivered a master stroke that brings him out of the shadow of his longtime mentor, Sergio Marchionne.

europe.autonews.com

An FCA-Renault merger would bring Elkann out of Marchionne's shadow

Andrea Malan


If Fiat Chrysler Automobiles merges with Renault to create the world's third-largest automaker, FCA Chairman John Elkann will have delivered a master stroke that brings him out of the shadow of his long-time mentor Sergio Marchionne.

For some years now, Elkann, 43, has been looking for a deal that will secure the future of the automaker founded by his grandfather Gianni Agnelli

He has said many times that the Agnelli/Elkann family was open to becoming a smaller shareholder in a bigger automaking entity. The 50-50 merger that FCA has proposed to Renault offers that possibility.

"We are not sellers, but our family is ready to dilute its stake in FCA if the aim is to make FCA stronger," Elkann said in an interview with Bloomberg in 2014.

The Renault deal would give Exor, the Agnelli's listed holding company, a 14.5 percent stake in the new group, making it the largest shareholder ahead of the French state and Nissan, which would have 7.5 percent each.


The proposed merger fits perfectly with the strategy laid out in 2015 by Marchionne, the late FCA CEO, in his "Confessions of a Capital Junkie" speech. Marchionne said the remedy to the industry's "value-destroying addiction" to capital was consolidation. A merger would quickly unleash all the potential cost savings of joint purchasing and platform standardization, helping to cope with the ever-increasing investments needed in new technologies.

Elkann has leveraged the experience he gained standing beside Marchionne over many years, said Stefano Aversa, Europe head of consultancy AlixPartners.

Elkann was directly involved in a number of merger projects, Aversa said, including a bid to merge with General Motors. That bid was unceremoniously rebuffed by GM CEO Mary Barra.

Elkann joined Fiat's board when he was 21 in 1997. He rose to be chairman of Fiat, then of Fiat Chrysler when it was created in 2014. He worked for 15 years in alongside Marchionne, keeping a low profile at first but gradually taking a larger role. His first big move was Exor's deal to purchase Partner Re, an American reinsurance company, for $6.9 billion dollars.

Elkann was unexpectedly thrust into the public eye in July 2018 when Marchionne died. Marchionne had been due to retire in April 2019 but his successor had not yet been chosen. Elkann hastily had to pick new bosses not just for FCA, but also for Ferrari and CNH Industrial, Exor's two other main companies.

Elkann is very much at home in the global business community. He was born in New York, educated in the UK, Brazil Italy and Paris, and is fluent in four languages.

His friends include Warren Buffett and his advisers include Henry Kissinger, who was close to Elkann’s grandfather. He is member of the secretive Bilderberg Group, where according to the French press, he first met current Renault chairman Jean-Dominique Senard, who is expected to be CEO of a merged FCA-Renault with Elkann as chairman.

At least in the first stages of a new FCA-Renault company, there would be a form of collegial management, which will likely involve the current leadership of both groups, he said.

If Fiat's acquisition of Chrysler 10 years ago was Marchionne’s masterpiece, a merger between FCA and Renault would show Elkann has learned his mentor's lessons very well indeed.

 

[Bili]

That’s is reassuring. Hopefully the difficulties of establishing Fiat in the US will make them think twice. Not that I think Fiat needs to go away, I’d still like to see them survive here as a niche compact vehicle brand.

In my opinion Fiat as a brand is not important for US. But rise of Fiat in EU could be or is important. Renault platforms or platform share and Renault sales network will certainly help on some markets. Right from the start they would be #2 in Europe with potential to grow due to slow sales and lack of products for Fiat in the recent years. John Elkann is certain that employment rate in Italy will rise.
What FCA has are premium and luxury brands like Alfa and Maserati. But FCA doesn't have budget brand like Lada or Dacia. So they are complementary in EU, Russia and North Africa.
This combined group would over the nigh have huge potential and profits not in 1 but in 3 regions, NAFTA, LATAM and EMEA. That's not the case with sole Renault or FCA. Plus further slashing of suppliers costs.

 

[Bili]

Good question (no sarcasm). I've done some reading up on this subject and three things are becoming more apparent:

1: This looks like more of an FCA-Renault deal than an FCA-Renault-Nissan-Mitsubishi deal.

2: While I thought Fiat and Renault would be at odds, that might not be the case. Fiat (in Europe) sells the 500 and Panda in huge numbers (I don't remember the segments exactly but Reno don't do as well there). Renault does much better in the bigger segments though, specifically with the Megane and Clio.

3: They would get more money from Renaults sales, the increased cash flow might be directed to the development of some next-gen cars, and they would also get access to other platforms/resources in segments FCA (U.S.) doesn't have cars in. The Megane, Clio, etc. <- That's important.

It's not certain that FCA would use the extra money from Renault sales for development of their own cars (or if Reno would agree with that), but as long as the possibility is there then I'm good with that. On the platform/resource side, imagine if FCA and Reno made a combined effort to make a next-gen Renegade, 500X, and Captur. That would drop the cost to make newer-gen versions of all three, and both companies could benefit from the (potential) profits of those vehicles selling in markets they weren't before. Or in FCA's case, selling markets with higher sales than before.

For the third part, they might just get the increased cash-flow and some resources from Renault. No Renault platforms and little of their resources, but more money. That's not my favorite outcome, but still a plus nonetheless.

This merger may delay future product if FCA/Renault decides to add or send some engineers to a certain project. Or if, like Toyota and BMW, they need to figure out how to work together for the first few years. Especially if they do this while working on an actual product. Worse still, if they do this while working on a product that's already well into the development phase.

I'm not so sure about that.

Let's consider this: In the event that the Renegade, 500X, Tonale (which I forgot), and the Captur all get a next-gen version (and are all developed together), Jeep and Alfa won't have a problem differentiating their cars from the Renault version. The Jeep will still be off-road oriented and the Alfa Romeo will be the most luxurious and probably the best to drive. More likely than not, that leaves the Renault with being the best value, a place the 500X could also occupy. However, the Captur would be in the way, that leaves the 500X with being the least expensive. Which could quickly become a slippery slope into becoming the cheapest (in a bad way).

All four vehicles (Renegade, Captur, Tonale, and 500X) are sold in Europe too. So it's not like the 500X can occupy the Renegade's space. Perhaps the 500X could be like a less expensive Tonale, but Fiat needs a stronger brand vision than just selling less expensive cars with the same attributes.

In the event that more platforms are developed where there are a Fiat and a Renault (and at least one other brand), Fiat might find itself struggling to establish what it's model is when compared to its siblings. Too much of that and Fiat might be in trouble.

I'm not expecting much for a Chrysler brand with this merger. But maybe I'm wrong. Actually problem is with EU and US Free Trade Agreements or lack of them. And FCA is lacking of North American capacity so for D/midsize segment they would need to rebadge European made Renault Talisman. Similar for C/compact segment. Both Fiat Tipo and Renault Megane in its sedan form are Made in Turkey.

Speaking about B/subcompact segment. Renault is making Clio hatchback and a new generation will go on sale before the end of this year. For Europe it means that next generation Fiat Punto will be made. That's a segment where Fiat once was a market leader and Punto itself as Grande Punto was the last car in Europe which had overthrown VW Golf as the best selling car in EU.

Captur? Yes, it's a pure B segment crossover. No powerful engines, no independent rear suspension, no AWD as an option. That's not the same segment as for 500X and Renegade. They are both in some form of limbo between B and C segment. There are not much direct competitors except maybe a new VW T-Roc or Toyota H-CR.
They are platform mates for a Jeep Compass.
And that's leads us to Alfa Tonale. Tonale is a proper C segment model as is Compass. As I know handling will be improved by more than one update. One update should be wider trak in comparison to Compass, around 2" wider to be precise. Renault counterparts are Renault Kadjar which has twin brother in Nissan Rouge Sport which is known as Qashqai in Europe.

So some platforms will die. We don't know what will replace them. It will not be imminent.


On engine front it's different. Renault has 1.8 turbo, FCA 2.0 turbo. I can see that 1.8 turbo as thing of the past or maybe they will revive 1.6. Dunno.
For smaller engines it's different. Both Renault and FCA has an all new small turbo 1 liter and 1.33 engines. It would be a hard call.

For diesel. Renault 1.5 got an update while 1.7 (1.75 to be precise) is a new one. They've updated 2.0 but FCA has all aluminium 2.2 (2.15 to be precise) as is used for Alfa and Jeep Wrangler. So I can see death os some diesels and yet again bigger ones will almost certainly be from FCA.

For 6 cylinder engines it's a no contest. Renault has nothing while FCA has 3 liter V6 diesel, Maserati and Alfa will use V6 90° in the future while FCA US brands will use upcoming GME T6 Inline 6 engine.


On a hybrid fronts they may merge efforts and add new Renault's HEV technology which was not previewed by FCA. FCA will certainly provide PHEV for RWD based cars but could do the same for FWD based cars as I'm not aware on any Renault project on that front.
For MHEV FCA has BSG system. But P2 MHEV which is more advanced it at the end of development by FCA and we can see it on road in a year and half. Renault has also some projects on that front. So they could merge it.

 

[Bili]

Bloomberg - Are you a robot?

A few hours after revealing a combination that stands to reshuffle the global automotive industry, John Elkann appeared at Bocconi University in Milan to tout the virtues of a merger between Fiat Chrysler Automobiles NV and France’s Renault SA. It’s a familiar venue and a familiar line for the leader of Italy’s preeminent industrial dynasty. A decade earlier in January 2009, Elkann had stood in the same place to announce Fiat’s takeover of Chrysler.

And like last time, the underlying motivation is the same -- to build scale that helps insulate carmakers against the shocks raining down on the industry. The types of impacts, however, are new: electrification, autonomous driving, a new breed of drivers questioning the need to own a car, and rivals that a decade ago hardly existed, like Alphabet Inc.’s Waymo or Tesla Inc. But now as then, the urge is to make an audacious bet or risk being swept away by the wave of change, Elkann said.

"We acted with courage, as we did in 2009,” he said Monday in his first public comments after Fiat Chrysler announced the deal with Renault, a 50-50 ownership through a Dutch holding company that instantly won the blessing of investors in both companies and a warm response from other major stakeholders, including battle-hardenend French workers.

But one element was notably different, or rather, absent: the push for consolidation had been championed for a decade not just by Elkann, but even more relentlessly by Sergio Marchionne, the larger-than-life Fiat Chrysler chief executive officer who died suddenly last July following an illness.

Strange Bedfellows

The two made an odd couple, the hard-charging Marchionne and the boyish, floppy-haired Elkann. But they were bound in a common mission, touring the globe with their message that carmakers should join forces and embrace combinations rather than what they saw as wasteful duplication of the same technologies. Following a frosty reception for their idea across the Atlantic, the bride ended up residing much closer to home, just across the Alps. Elkann, now flying solo, shuttled back and forth between Turin and Paris on his private jet to get the deal of his lifetime across the finishing line.

This story is an account of people involved in the negotiations for the planned combination of Fiat Chrysler and Renault, a merger that aims to create the world’s third-biggest carmaker. They spoke on condition of anonymity discussing private matters. The companies declined to comment on details of how the transaction came together.

For years, Fiat Chrysler had made no secret of the fact that it wanted to play an active role in consolidation. Renault, for its part, also realized that it was too small alone to withstand rising market turbulence. The carmaker is a notable force in electric vehicles and has a strong link to Asia thanks to its alliance with Japan’s Nissan Motor Co., but it’s absent in the crucial U.S. market, an open flank that a link-up with Fiat Chrysler could shore up.

Ghosn Gone

There’s another element that Renault shares with Fiat Chrysler: the loss of its biggest champion of growth and expansion. Carlos Ghosn, the carmaker’s former CEO and the head of the Renault-Nissan alliance, had fallen from grace since his arrest in November in Tokyo on allegations of financial misconduct (which Ghosn denies). As a consequence, the future of the alliance began looking in peril, as Ghosn’s time in detention wore on and none of the executives who remained had the clout to force the consolidation plan he had plotted.

Nissan’s resistance to embrace a full merger between the partners, coupled with a steep decline in earnings at the Japanese manufacturer, heightened Renault’s urgency to push ahead on an alternative path.

Jean-Dominique Senard, a well-connected French executive handpicked by the French government from tiremakerMichelin, replaced Ghosn and quickly realized the magnitude of the task on hand to repair frayed relations with Nissan. But by the end of April, it was clear Renault’s push for a full-blown merger with the Japanese partner had reached a dead end.

Many Dinners

Looking for another option, Senard found an eager partner in Elkann. As talks about a possible combination picked up speed in recent weeks, the two men frequently called one another on their mobile phones and visited each other to discuss the finer points of a possible deal over meals.

Elkann, who spent parts of his studies in France and speaks the language fluently, isn’t a stranger to the country’s car industry. For some time, Fiat Chrysler had entertained a partnership with PSA Group, the maker ofPeugeot and Citroen cars. But the prospect of getting such a deal done proved too arduous. PSA would mean major job cuts and plant closings -- a turnoff for labor and politicians who will ultimately pass judgment on any deal. With France enduring months of violent street protests against social inequality, there was little appetite in the political elite to get behind job losses and factory closings.

In the end, the two sides couldn’t agree, and talks fell through abruptly in mid-April, giving Senard and Renault another stab at forging ahead instead. Initial contact with Elkann quickly turned into a more formal conversation as both sides realized the complementary nature of a combination. Renault promised a fleet of electrified cars, and Fiat Chrysler access to the U.S. market.

It’s a prospect that Fiat Chrysler played up when it made the announcement on Monday, touting the promise of joint annual synergies to amount to more than 5 billion euros ($5.6 billion), coming from areas such as purchasing power.

Code-named “Newton,” talks quickly progressed over a set of dinners involving the two executives, who managed to get the accord worked out at a crucial date during which they agreed on main terms. With voting already underway for elections across large swaths of Europe in the latter part of last week, the parties agreed to wait until after the outcome of the elections. Both in Italy and in France in particular, the political stakes were high, with the rightist League party of Deputy Premier Matteo Salvini and France’s Marine Le Pen seeking to solidify their positions.

The French government, Renault’s biggest shareholder, quickly rallied behind the idea of the two companies joining forces. Finance Minister Bruno Le Maire met last week with Senard to discuss the proposal, government spokeswoman Sibeth Ndiaye said on BFM television Monday, saying that Europe needs to have what she called “industrial giants.”

Salvini, too, who initially threatened to intervene, later gave his blessing -- but only after upgrading Fiat’s no plant-closing pledge to a promise not to cut jobs, telling Agence France-Presse he trusts the deal “will safeguard every job in this country.”

Meeting in Japan

Since Marchionne first published his iconoclast views in "Confessions of a Capital Junkie" in 2015, Renault was seen as one of the best fits for Fiat in terms of cost saving and sharing investments. That doesn’t mean there aren’t hurdles. The carmakers are moving ahead without Nissan and Mitsubishi Motors Corp., the other member of their troubled alliance. Fiat has conditioned the merger talks on Renault agreeing not to pursue a transaction with Nissan in the short term, though the Japanese company would be welcome to join the merged entity later.

Senard will get to feel the Japanese temperature this week when he travels to Asia for a board meeting of the Renault-Nissan alliance, the first time since Renault’s partner of two decades was told of the pending deal with somebody else.

Elkann, for his part, touted his company’s track record in pulling off the integration of two companies. After all, Chrysler was the cast-off of another failed merger, with Germany’s Daimler, which struggled in vain for years to make the combination work. Speaking on Monday in Milan, he said the success of that combination, coupled with a common heritage, are two of the main ingredients that made Fiat Chrysler push ahead with Renault.

“The Chrysler experience encouraged us to look at what we can do together,” Elkann said. “Fiat was founded 120 years ago, Renault too. My family has been associated with the auto industry since then."

 

[Bili]

This seems as a done deal to me.


Renault Poised to Give Nod to Fiat Merger as Soon as Next Week

Renault SA

is expected to give preliminary approval to Fiat Chrysler Automobiles NV’s merger proposal as soon as next week after briefing the French carmaker’s two Japanese partners, according to people familiar with the matter.

Renault aims to convene a board meeting to move forward with the plan to create the world’s third-biggest automaker, based on a timetable agreed upon during negotiations with Fiat last week, said the people, who asked not to be identified because the details are confidential.

Jean-Dominique Senard, the Renault chairman who would become chief executive officer of the enlarged auto group, will attend a scheduled monthly meeting Wednesday morning in Japan for the board overseeing the alliance among Renault, Nissan Motor Co. and Mitsubishi Motors Corp. He will seek to explain the rationale of the transaction to the partners.

While Fiat Chrysler and Renault aren’t seeking a merger with Nissan for now, the companies plan to eventually invite Nissan and Mitsubishi to join forces, the people said.

Representatives for Renault and Fiat declined to comment.


Both Fiat and Renault went through dramatic changes at the top last year after former Fiat chief Sergio Marchionne died and Carlos Ghosn, who was chairman of the Franco-Japanese alliance, was arrested in Tokyo on charges of financial crimes.

Now the two carmakers are moving on without the Japanese partners. Renault and Fiat Chrysler estimate cost savings of more than 5 billion euros ($5.6 billion) from the merger, and an additional 1 billion euros in savings for Nissan and Mitsubishi Motors. Renault and Fiat made a combined 8.7 million cars last year, which would vault the pair past South Korea’s Hyundai Motor Group and Detroit’s General Motors Co. The world’s two biggest automakers, Volkswagen AG and Toyota Motor Corp., each topped 10 million vehicles last year.

Bloomberg - Are you a robot?

 

[ViperDave]

Does this merger include Nissan and Mitsubishi also? I have heard that auto group is a mess since
Carlos G went to jail for money issues with the company.

 

[GasAxe]

Sounds like Nissan knows they are in a corner and are putting on a good face to play ball. I think Mitsubishi is along for the ride no matter what.

 

[AlexB]

Does this merger include Nissan and Mitsubishi also? I have heard that auto group is a mess since
Carlos G went to jail for money issues with the company.

Not yet.
The Deal won't close until April-June of 2020, so they will be spending 2021 integrating Renault into FCA.
I don't see any changes on the Nissan front until 2021-2022 at the earliest.

 

[Bili]

Not yet.
The Deal won't close until April-June of 2020, so they will be spending 2021 integrating Renault into FCA.
I don't see any changes on the Nissan front until 2021-2022 at the earliest.

Yeah. At least one year to finalise deal even if they accept it by the next week.

Although they may start some projects immediately especially for Europe like for example new Fiat Punto.

 

[Blown7]

Does anyone think the reason we haven't seen or heard about new models is exactly whats happening now?? (The offer/merger)?

Someone said a week or so ago that when "talks" with other companies are going on, all hype and design on new vehicles comes to a halt.
I know some talk was held back because of union negotiations coming up...

Now it all kind of makes sense.

 

[Bili]

I don't think so.

It's because FCA is overutilized in North America, the shuffle is still ongoing, and they are prioritizing high margin brands with quick return of investment.

This deal for FCA if we look just at Renault is not important for North American market but it is for Europe and in smaller extent South America.

 

[Bili]

Apparently Nissan had approved this whole operation:

Nissan sees no major downside to FCA-Renault merger

Nissan, Renault and Mitsubishi leaders gathered in Japan for a scheduled alliance meeting -- one overshadowed by FCA's merger proposal. "Overall, we don't see any particularly negative aspect" to the planned merger, which was for Renault and FCA to decide, Nissan CEO Hiroto Saikawa said.

www.autonews.com