Home / Business / Fiat Chrysler proposes more with Renault, would be third-largest automaker

Fiat Chrysler proposes more with Renault, would be third-largest automaker

Fiat Chrysler proposes to create the world's third-largest automaker and combine their investments in the race to make new electric and autonomous vehicles.

The merged company would reshape the global industry: it would make some 8.7 million vehicles a year, General Motors and trailing Volkswagen and Toyota leapfrogging.

Shares of both companies jumped over 10% on the news of the offer, which would see each side's shareholders split ownership in the new manufacturer.

19659004] Renault welcomed the idea. The Renault wants to study it "with interest." In a statement, Renault said it would "improve Renault's industrial footprint and generator of value for the Alliance" with Japan's Nissan and Mitsubishi.

Fiat Chrysler's offer comes at a key moment for Renault. Nissan, but those plans were reportedly arrested by Carlos Ghosn on financial misconduct charges in Japan.

Now, Renault-Nissan-Mitsubishi alliance, which is the biggest maker of passenger cars in the world. While Fiat Chrysler says the deal with Renault would take the alliance and lead to savings for them, it is unclear how the Japanese companies would react in the long term.

A deal would save 5 billion euros ($ 5.6 billion) for the merged companies each year by sharing research, purchasing costs and other activities, Fiat Chrysler said in a statement. It said the deal would involve no plant closures, but did not address potential job cuts.

Fiat Chrysler is stronger in the U.S. and SUV markets, while Renault is stronger in Europe and on electric vehicle developments. Together, they would be worth $ 40 billion euros.

Analysts at financial firm Jefferies said it was "hard to disagree with the logic" of the deal .

"The elephant in the room is who wants to run the entity," analysts Philip Houchois and Himanshu Agarwal wrote in a note to investors.

Mergers of equals can not be solved positions and which brands are promoted and invested in most. A tie-up between Daimler and Chrysler in the 1990s, which was baptized as a merger of equals, but it collapsed nine years later amid cultural differences and recriminations.

Fiat Chrysler upscaled 11% and Renault 14 % in European trading.

The French government, which owns 15% of Renault, said it is "favorable" to the idea of ​​a merger with Fiat Chrysler but wants to study its conditions more carefully, especially in terms of "Renault's industrial Sibeth Ndiaye said.

Such a merger would show "our capacity to respond to European and French sovereignty challenges in a globalized context," she said.

Collaboration between automakers has been pursuing their technological pursuit of electrical vehicles, net connectivity and artificial intelligence for vehicles. Automakers are also under pressure from regulators, particularly in Europe and China, so they can come to terms with climate change regulations and scandals.

The merger idea is the largest corporate

France's influential CGT union. Sergio Marchionne last year.

France's influential CGT union

Matteo Salvini, the leader of Italy's rightwing populist League party and the deputy premier, said that "if Fiat grows, it is good news for Italy and Italians, "but every single job."

In Tokyo, Nissan's CEO Hiroto Saikawa would not comment on the idea of ​​t he deal but said, "I am always open to exchanging constructive views on strengthening the alliance."

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