If French automaker Renault green-lights a proposed merger with Fiat Chrysler Automobiles, the companies nearly immediately could begin saving money by consolidating components and basic structures on many of their most popular vehicles, an industry analyst said on Tuesday.
The merged company would be the world's No. 3 automaker and be 50 percent owned by FCA shareholders and 50 percent by Renault shareholders, Fiat Chrysler Automobiles said in a statement Monday.
"The combined business would sell approximately 8.7 million vehicles annually, would be a world leader in EV technologies, premium brands, SUVs, pick-up trucks and light-commercial vehicles and would have a broader and more balanced global presence than either company on a standalone basis", FCA said.
The synergies could multiply if they invite Japanese automaker Nissan Motor Co, now Renault's alliance partner, to join the merger, according to a former Renault and Nissan executive.
Both automakers would have equal representation on the board of directors of the merged entity and half the shares would be split among FCA's current shareholders and the other half among the shareholders of Renault.
Fiat Chrysler announced on Monday that it will look to pursue a $35 billion merger with French automaker Renault. "We need giants to be built in Europe". Automakers are also under pressure from regulators, particularly in Europe and China, to come up with electric vehicles so they can meet tougher climate change regulations and after scandals over the amount of pollutants engines truly emit. "I want this deal to take place within the framework of the alliance between Renault and Nissan", he said.
The FCA Group estimates €1bn in annual synergies for Renault's alliance partners Nissan and Mitsubishi from the combination.
But investors were enthusiastic about Fiat Chrysler's plan, pushing the company's shares up 8 per cent and Renault's 12 per cent. French officials would prefer a deal that strengthens the existing Renault alliance by bringing in Fiat, and at worst a deal with the Italian-American carmaker would have to be alliance-neutral, the person said.
It is a bitter pill to swallow for Nissan, which appeared to be completely left in the dark about the project and is already battling falling sales amid reputational damage from the downfall of Ghosn, who is fighting financial misconduct charges.
Auto industry analysts say the main focus of attention at the meeting will be how Senard explains Renault's merger with the FCA and its relations with Nissan.
France's finance minister has demanded that no factories in the country shut and that jobs for French workers be preserved if a proposed merger between Renault and Fiat Chrysler goes ahead.
The idea has the backing of the French government, which owns a 15 percent stake in Renault, after Fiat said the merger would not result in the closure of any production sites.
"Renault's top priority is now FCA", said Takada.
What will a Fiat Chrysler/Renault merger mean for Nissan?