Over the past week, Fiat Chrysler revealed that they are in advanced talks with Renault, discussing a deal that would bring the two companies together by joining the major components of each business.
Bringing these two companies together, as they confide, would help these two lesser-known makers to better deal with the challengers facing all car companies, these days. This includes the softer demand for smaller cars and sedans.
While there is no guarantee that the two will reach any agreement, should they reach a decision, the process will be quick. More importantly, though, this would bring Italian-American automaker into the Renault-Nissan-Mitsubishi Alliance that was originally formed in 1992. At that time, you may recall, the entire auto industry was in transition, experiencing major consolidations across the board.
This would be an important acquisition for the French automaker, Renault, as the conglomerate seeks to move forward after the high-profile and extremely public arrest of Nissan Chairman Carlos Ghosn, last year. His allegations of financial misconduct certainly complicated things for the Japanese car manufacturer. However, Nissan said, back in May, that it was on track to post its weakest annual profit since 2008; so more changes were definitely in order.
By bringing Fiat Chrysler on board, then, the Renault-et-al Alliance would expand to the largest carmaker in the world, with approximately 15.6 million in combined sales, last year. It might surprise you, but Volkswagen is currently the global car manufacturing leader, with 10.8 million sold last year.
In fact, Fiat Chrysler had been openly looking for merger partners for some time now. Chief Executive at the time, Sergio Marchionne, made a public decree in 2015 about potentially combining with General Motors. Fiat had also considered merging with a Chinese automaker.
Again, there is no indication that this deal will, in fact, go through. And the two companies face much tighter environmental regulations in Europe, where carmakers are being forced to invest billions in electric vehicle technology and development that will help to start drastic reduction in emissions. And both of these companies are also having trouble getting a foothold in China—which is actually the largest automobile market in the world—and, finally, have not been as quick to adopt autonomous vehicle technology as the rest of the industry sets this trend.