In a move that will help strengthen both, Fiat confirmed that it is holding talks with Renault for a merger. The combined business will be equally owned – 50% by Fiat and another 50% by Renault. Initial talks took place without Renault’s partners – Nissan and Mitsubishi. Word is that they will be invited at a later stage to join forces with the merger. Fiat said the new venture will be a 50-50 ownership between Fiat and Renault.
Such a merger will iron out weaknesses for both Fiat and Renault and will help the alliance gain a strong foot amid a global decline in car sales. The need for merger or consolidation among the manufacturers have increased due to a number of factors. Electrifying, autonomous driving and stricter emission norms to name a few. Another well known reason is cost benefits – attained by sharing knowledge and technology among partners.
What can we expect?
The merger will result in creating a brand portfolio that will serve all the segments in key markets. To start with, the portfolio will include luxury brands – Ferrari, Maserati and Alfa Romeo and brands with more reach – Jeep, Dacia, Lada, and Ram and other brands from Renault Group.
This merger will result in a well balanced global presence – something that will be impossible to achieve standing alone for both parties. The alliance will also be a world leader in EV technology, Premium brands, and light commercial vehicles. The sales would hover around 8-9 million vehicles globally.
Fiat also held talks with PSA group initially in the process of evaluating potential parters. The French Government will evaluate any potential impact of the tie-up in terms of jobs, industrial footprint and valuation. The French Government will prefer a deal that strengthens the existing Renault alliance by bringing in Fiat.