General Motors’ crosstown rivals Fiat Chrysler Automobiles may be in for a shakeup in the coming months after the automaker formally proposed a merger with French automaker Renault SA Monday.
Under the proposed agreement, FCA and Renault would each own 50 percent of the new business, which would be operated under a Dutch holding company. Renault is also in an existing strategic partnership with Nissan and Mitsubishi, which would also be included in the agreement.
The $37 billion merger would create the world’s third largest automotive alliance (behind Volkswagen and Toyota and surpassing GM), with combined sales of 8.7 million vehicles a year and combined annual revenue of €170 billion (about $190 billion USD).
2018 Dodge Challenger SRT Hellcat
In a press release, FCA said: “the proposed combination would create a global automaker, preeminent in terms of revenue, volumes, profitability, and technology, benefitting the companies’ respective shareholders and stakeholders.”
“The combined business would sell approximately 8.7 million vehicles annually, would be a world leader in EV technologies, premium brands, SUVs, pickup trucks and light commercial vehicles and would have a broader and more balanced global presence than either company on a standalone basis,” it added.
FCA also said the benefits of the Renault merger would not be “predicated on plant closures,” but rather on making more logical capital investments in shared global vehicle platforms, architectures, powertrains, and technologies.
This move is very much in line with late FCA CEO Sergio Marchionne’s 2015 prediction that automakers would have to consolidate to survive as research, development and production costs climb. Marchionne subsequently pushed for a merger for FCA, trying hard to shack his company up with General Motors and then Volkswagen.
Sergio Marchionne in 2017
A recent Forbes article pointed out that GM’s recent restructuring efforts, along with Ford’s, may be evidence that Marchionne was right. The eccentric Italian reasoned that today’s automakers were wasting billions developing different versions of things to performed the same task (ie. engines, transmissions, platforms etc.) and said such business practices were unsustainable.
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Comments
FCA is like that guy at the bar just before they turn on the lights at closing: Willing to merge with anybody.
Another nail to GM coffin. FCA becomes bigger and GM trying to be small local carmaker. Time let us know which way is better choice.
Marchionne was a brilliant man. It’s like he could predict the future: sedans, this, etc.
FCA is getting stronger every day. GM needs to be careful.
Well I can see all the good PSA has done for Mitsubishi and Nissan……. how many years will Goshen will get?
Long before Sergio talked mergers it was already predicted that nearly everyone would need a dance partner. He was not the first to bring it up.
PSA has nothing America wants. The only thing of value at FCA is the Jeep and Ram lines. The RWD cars appear to be lame ducks with no apparent replacement for them. Ferrari has gone its own way. Fiat is a major drain.
There are two ways to the future for the strong companies. One is to go big like a VW. The other is to focus on the core products and profits, both paths require some partnerships.
The others like we see here is to tie all the life rafts together and hope something sticks.
GM is investing in tech. They have a big jump on cuts and ATP. They have focused on the core. It is a formula that has saved many companies that got too large to remain profitable.
Even this PSA merger will need to see cuts and improved efficiency.
I see this merger taking only the best of each company and they each will focus only on what they are good at. Will it work? It might. But there is more than one path to success here and GM Merging with FCA offered only Jeep as anything of interest to them.
To be honest all 4 companies are lucky they are still here.
Because mergers have gone so well for both companies in the past.
GMs short comings are they are still extremely inefficient compared to the competition.
1) It’s with Renault, not PSA.
2) Renault already supplies many powertrain components to Nissan for North American sales, they are already here whether you are aware of it or not.
3) FCA has plenty of valuable brands…sure Chrysler, Fiat and Lancia are not. But Alfa Romeo has been reborn in North American and F1. Plus, Maserati and Dodge do not sell high volume but have made their development money back and then some.
False! Alfa Romeo, Maserati and Fiat sales are in the toilet being down over 50%. Those brands are dead and have lost money hand over fist.
Just because you become a large automaker doesn’t mean that you are more profitable or capable of handling industry changes just ask General Motors. And really think about this Renault and FCA along with Nissan and Mitsubishi means that in total they will have 15 different brands some of which will step on one another. And what is FCA really offering, Jeep and RAM. None of the other 5 brands under FCA are strong enough to survive independently nor globally including Alfa Romeo and Maserati. Who knows what would happen to Chrysler, Dodge, or Lancia. And Think about the future according to automakers currently, electrification and autonomy, how are 15 different brands going to survive in a future like that. Sure if they merger they will become the largest, but I the way I see it success won’t come that easy.
Yes!, French management, Italian engineering with Chrysler quality. What can go wrong? ?.
I don’t see Chrysler/Dodge going away in the Americas with the money and commitments spend on the upcoming models, IMO Dodge would get a much needed small fwd car(s) and small, fwd CUV for US/Can and Latin America from Renault.
Renault would probably get truck platform access and limited American access under the Renault name.
Renault did really well the last time they were here…….
This is a like a bunch of bench players forming a team to try to win a championship. GM has nothing to work about. Combining mediocrity doesn’t create success it creates larger mediocrity.