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NOW OFFICIAL! FCA and Renault partnership

Nizam Shaikh
Written by Nizam Shaikh

Fiat Chrysler Automobile and Groupe Renault could be going into a partnership with 50-50 shareholding and a balanced administration as FCA submits proposal to Groupe Renault. The initial discussions are expected to be followed by the collaboration particularly to develop and commercialize new technologies and it is clear that through merger, the companies could improve growth and development. The companies through this collaboration can create various opportunities in the automotive industry like autonomous driving, electrification and connectivity.

The merger will create the 3rd largest Original Equipment Manufacturer with a vehicle sales figure of 8.7 million units per annum. The union will create a global automaker which will be dominant in terms of volumes, revenue, technology and profitability, benefiting the stakeholder and respective shareholders. This will also create a market presence in key regions and vehicle segments such as electric vehicles, SUVs, pick-up trucks, light commercial vehicles (LCVs) as well as premium brands.

The proposed merger does not signify plant closures but would be achieved through efficient capital investments in global vehicle platforms, powertrains, architecture and technologies. FCA board believes that this combination could have the expertise and resources to operate with the fast-changing automotive industry and would create more opportunities for employees of both the companies. Combined, the business will bring a vast brand portfolio that would be present in all the key segments from Luxury brands such as Alfa Romeo and Maserati to the entry-level brands such as Dacia and Lada, including the well-known Fiat, Ram, Jeep and Renault brands as well as other commercial vehicles.

Groupe Renault has a strong market presence in Europe, Russia, Africa, and the Middle East, while FCA is a market leader in North America and Latin America where Renault is nearly non-existent. FCA has partnered with Waymo, BMW and Aptiv to evolve its capabilities in the autonomous driving sector, and Renault has about ten years of experience and it is the highest selling EV OEM in Europe and both will benefit from each other.

Based on the companies 2018 global sales, the combination of FCA and Groupe Renault on a geographical basis will stand number 4 in North America, number 2 in Europe, Middle East and Africa and number 1 in Latin America and would have increased resources for the Asia Pacific region. Based on the 2018 results, the combined revenues would be nearly 170 Billion Euros per annum with an operating profit of more than 10 Billion Euros and a net profit of more than 8 Billion Euros.

FCA has proposed for an alliance only with Groupe Renault but also looks forward to working with Groupe Renault’s partners to create additional value for all the members. If FCA and Groupe Renault combine with the other partners – Nissan and Mitsubishi the alliance will form the largest global OEM, selling 15 million vehicles per year.