Fiat Chrysler has proposed a combined entity that would become the world’s third-largest carmaker.
Fiat Chrysler Automobiles (FCA) has proposed a deal that would reshape the global automotive industry.
This Monday, Fiat Chrysler pitched a finely balanced merger of equals to Renault aiming tackle the costs of far-reaching technological and regulatory changes, officially confirmed the reports heard over the weekend.
This 50/50 merger with France’s Groupe Renault, a move that would create the world’s third-largest automaker by production, will se both Fiat and Renault each own 50% of the business, combining sales of 8.7m vehicles a year — larger than General Motors.
An announcement on FCA’s website touted the merger as a chance to save €5 billion a year in synergies, merge platforms and powertrains and dump capital into EVs and other new technologies. It also said no plant closures would be needed, however, this combined business would sell approximately 8.7 million vehicles annually and most likely turn into world leader in EV technologies, premium brands, SUVs, pickup trucks and light commercial vehicles, establishing a broader and more balanced global presence than either company on a standalone basis. The proposal also wants to inject fresh life into Renault’s alliance with Japan’s Nissan.
According to Reuters, shares in both companies jumped more than 10% as investors welcomed the prospect of an enlarged business capable of producing more than 8.7 million vehicles a year and aiming for 5 billion euros ($5.6 billion) in annual savings.
Experts believe this proposed tie-up would have nearly €170bn in annual revenue on operating profit of more than €10bn, and net profit exceeding €8bn, said the FCA, expanding brand presence in North America, Europe and Latin America.
The Financial Times reports that the top leadership positions were not disclosed in Monday’s proposal. However, John Elkann, who steers Exor, the Agnelli family investment vehicle, is expected to become chairman of the merged group, while Renault chair Jean-Dominique Senard would be named chief executive, multiple people close to the talks said. Englishman Mike Manley, chief executive of FCA, is expected to be named chief operating officer. A board of 11 representatives would include four representatives each from FCA and Renault and one nominee from Nissan.