Italian-American automobile manufacturer Fiat Chrysler, and French multinational automaker Renault are currently in the talks of a possible merger. The union seeks to answer problems on cutting costs on vehicles production by combining company resources and provide the globe with the next generation of vehicles.
Representatives from Fiat Chrysler Automobiles (FCA) said that the combined business would be divided 50/50 between shareholders of FCA and Group Renault where a board of governors would hold a majority of dependent directors.
In a recent earnings talks with Fiat Chrysler CEO Mike Manley, he states that the companies are “going into an environment where there are going to be opportunities,” positive on the future possible venture with Renault. According to their calculations, the merger of the two multinational automakers could generate savings of $5.6 billion annually. Additionally, no plant closures and job losses are expected to occur from the union. On the contrary, the merger may provide opportunities for future developments on electric and autonomous vehicles
While it is yet to be decided by the approval of the boards of both auto manufacturers, the planned merger could give birth to the third largest automaker globally with estimated sales of 8.7 million vehicles a year. Last year, Fiat Chrysler, with a majority of sales coming from North America, sold 4.85 million vehicles worldwide, while Renault that mostly operates in Europe, sold 3.8 million.
The merger is not related in a way to the Renault-Nissin-Mitsubishi Alliance which in recent months have been speculated by primary news sources to be in the brink of collapse after financial scandals following the then Renault-Nissan CEO Carlos Ghosn, have surfaced.
Meanwhile, shares for both companies are up with Fiat at 13% and Renault at 11.5%.