Italian-American carmaker Fiat Chrysler Automobiles on Monday said it has proposed a “transformative merger” with Renault to create the world’s third largest automaker.
In a statement, Fiat Chrysler said the combined business would be owned 50-50 between its shareholders and those of Renault. “[The] combination would create the 3rd largest global OEM with 8.7 million vehicle sales and a strong market presence in key regions and vehicle segments,” Fiat Chrysler said. There would be no plant closures as a result of the merger, it said.
Renault, which is partly owned by the French government, already has a three-way partnership with two Japanese companies – Nissan and Mitsubishi. A merger between Renault and Fiat Chrysler would make the entity the third largest automaker in the world by sales, behind Volkswagen and Toyota, according to The New York Times.
The merger requires approval by boards of both automakers, CNBC reported. Fiat Chrysler said the combined entity would generate savings of $5.6 billion (Rs 3,896 crore) and be “carried out as a merger transaction under a Dutch parent company”.
Alliance between Renault and Nissan have strained since the arrest of ousted Nissan Motor chief Carlos Ghosn late last year. Ghosn has been charged in Japan with committing financial crimes while serving as the chief executive officer of Nissan, but Ghosn and his lawyers have denied the charges.
The proposal for a merger comes at a times when carmakers are under pressure to consolidate amid industry shifts, including towards electric vehicles, reported BBC.