FCA Group and Groupe Renault, possible merger to lead the market

The merger of FCA and Renault seems closer than ever, an agreement to form the automotive group with the highest volume on the market. If so, this giant would have up to 13 brands in its portfolio.

A little over a month ago, rumors emerged that the FCA and PSA groups were considering the option of merging, a move that would create a true automotive monster. However, shortly afterwards it became known that the Italian group had discarded that option, even though FCA and PSA renewed their agreement to develop commercial vehicles a few months ago. PSA has decided to set its sights on the premium segment, its favorite option being to acquire the Jaguar/Land Rover group.

However, moves in the industry have not stopped there. It seems that FCA is now letting itself be courted by Renault, since both parties have confirmed that they are in negotiations and that the intention is to close a union agreement between the two large groups, that is, the FCA-Renault merger. The aim of the two large groups would be to create a partnership positioned as one of the giants of the automotive world, with each group holding 50% of that company.

The FCA-Renault merger would form the most powerful group on the market

It is no joke that it would be one of the groups with the most power on the market, able to stand toe to toe with the Volkswagen Group. If both groups merged, the brand portfolio would exceed a dozen:

• The FCA Group brands are Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Jeep, Lancia, Maserati and Ram. Apart from the European market, the Italian group has a large presence and sales volume in the American market.
• On the other hand, the brands of Groupe Renault are four: Renault, Dacia, Alpine and Lada.

It seems that the first step, should this marriage go ahead, would be an exchange of technologies. This practice is widely used today, since it helps reduce development costs and, as a cornerstone, allows them to work together to create their new electrified models. Renault already has experience with this type of vehicle and, positioned as the leading seller of 100% electric vehicles, but FCA has not done its homework in that area, so it must make its move now if it does not want to be caught off guard.

This preliminary agreement between two groups of the size we are discussing reflects the concern that major manufacturers have regarding the costs that the new mobility will entail. For this reason, the only way is to join forces and budgets with other large firms so that costs do not affect each brand excessively.

Nissan and Mitsubishi could be harmed by the merger

However, not everything in this agreement would be roses. On the darker side are Nissan and Mitsubishi, a group that has maintained an alliance called the Renault–Nissan–Mitsubishi Alliance with Groupe Renault since 1999, in force until 2022. The poor results of the Japanese brand in the last fiscal year could mean that PSA’s arrival sends them to the bench.

If this were not the case and Nissan and Mitsubishi remained part of the equation, the muscle of the resulting new group could produce more than 15 million cars a year, a figure that would place it at the top tier of manufacturers worldwide. If Nissan and Mitsubishi were to separate, they would be left with 8.7 million vehicles.

FCA is in a delicate moment, as it is posting losses in Europe, although these are being offset by the good sales momentum enjoyed by Jeep and Ram in the United States. On the other hand, Groupe Renault is in a stable moment, although Nissan is proving to be a problem, with a 57% loss in the last fiscal year.

Therefore, the merger of FCA and Renault could be one of the major bombshells of the automotive sector. However, and as we said before, this type of alliance is going to become increasingly common, since it suits brands to share the enormous budgets that come from developing electric cars. So sit down and grab the popcorn: the transfer market has just begun.

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