France says Fiat-Renault merger must protect French jobs

Wednesday, 29 May, 2019

Renault Chairman Jean-Dominique Senard replaced Carlos Ghosn, who is dealing with criminal charges in Japan.

Early this year, rumours circulated that Renault was interested in Fiat-Chrysler after its hopes for a full merger with Nissan or even French competitor PSA were dashed. The merged company would produce some 8.7 million vehicles a year, leapfrogging General Motors and trailing only Volkswagen and Toyota.

Update: Renault's board of directors have met to discuss FCA's 50/50 merger proposal between the two carmakers.

The Renault-Nissan alliance has been under strain since the arrest and ouster of its former chairman Carlos Ghosn late past year on charges of financial misconduct, with Nissan recently rebuffing a merger proposal from its partner.

Renault and FCA had a combined market value of 32.6 billion euros ($36.5 billion) as of Friday.

Renault is positive about the merger with the FCA and believes the proposal will serve as a tailwind in Renault's push to merge with Nissan.

But analysts also warned of big complications, including Renault's existing alliance with Nissan, the French state's role as Renault's largest shareholder and potential opposition from politicians and workers to any cutbacks.

Fiat Chrysler Automobiles (FCA) has proposed a merger with the Renault Group.

FCA projected that approximately 90 per cent of what could ultimately be more than 5 billion euros in annual synergies would come from purchasing savings, as well as research, development, manufacturing and tooling efficiencies. It is also expected that the merger would result in capital-efficient investments in global platforms, architectures, powertrains and technologies. Companies like Google owned Waymo, Amazon and Uber, along with Tesla have been driving forward the development in electric and autonomous vehicles.

If all firms were brought together, they would be producing almost 16 million cars per year, well ahead of Toyota and Volkswagen which both sell around 10.6 million. "(That's why) we need to bring these forces together", he said.

France will be "particularly vigilant regarding employment and industrial footprint", another Paris official said, adding any deal must safeguard Renault's alliance with Nissan, which recently rebuffed a merger proposal from its partner.

The Italian deputy prime minister and the leader of the far-right League party, Matteo Salvini, said on Monday that Rome should take a stake in the combined company if required, while welcoming the deal. The companies own shares in each other, too.

Nissan Motor Co. Chief Executive Hiroto Saikawa wouldn't comment directly on the idea but said, "I am always open to exchanging constructive views on strengthening the alliance". He was shown speaking to reporters on Japan's Fuji TV news.

But Fiat Chrysler has lagged far behind on e-vehicles and is facing heavy fines from the European Commission if it can not reduce its cars' emissions in line with tougher standards being imposed on the continent.