FCA Walks Away From Potential Merger Deal With Renault

Blaming the French State and its inability to make a decision, FCA pulls out of the proposed merger that would have created the 3^rd largest automotive group in the world.

We’re not quite convinced this was the right move to make on behalf of FCA. In a nutshell, the Italian-American carmaker essentially got fed up with the French State inability to make a decision within reasonable delays. Yes, FCA walked away from the deal when it was nearly a done deal.

France is a majority stakeholder in Renault and, of their many concerns, Nissan, its workforce and their 20-year alliance together did not seem comfortable with the proposal. Nissan wasn’t actually part of the FCA deal which did put Renault in an even more precarious position. Both brands are not on the most friendly of speaking terms but the businesses themselves are heavily intertwined as the brands share technology, platforms and numerous other components. They even produce each other’s vehicles in various assembly plants.

Although FCA said they thought the arrangements were “compelling and carefully balanced” but the other players were not entirely convinced. Nissan had in fact withheld its support for the FCA deal altogether.

What happens now is anyone’s guess. Is the proposed FCA/Renault plan completely dead? It would seem not entirely as the French Finance minister is planning a trip to Japan next week.

The real question is why would FCA run off so quickly? They’ve been in the market for a big partner for a very long time and up until a day ago or so, they’d come closer than ever to finding one.

Have they found another alternative? Are stories of GM and Ford mergers scaring them on US soil? Do they want to join in? Wouldn’t that make sense though? An American powerhouse automaker… This may very well be the only way the US car industry survives in the long run.

Source: Bloomberg