Renault wants to merge with Nissan, then go after Fiat Chrysler

Renault could be too late since FCA is already talking to rivals

The late Sergio Marchionne used to say consolidation would be the only way to compete against the biggest global carmakers. The company looks certain to fulfill that goal, but perhaps not in the way he intended. The Financial Times reports that Renault wants to begin merger talks with Nissan in the next 12 months. Assuming a merger gets completed, the plan is for the combined company to then pursue another merger, with Fiat Chrysler a prime target.

Renault, Nissan, and Mitsubishi have been busy since cutting ties with ex-alliance boss Carlos Ghosn. They formed a new alliance board with Renault chairman Jean-Dominique Senard at the helm, Renault has shrunk the size of its board while Nissan added more outside directors, and the two agreed to a new governance structure to ease operational decision making. All three automakers have walked away from Ghosn-era goals to sell 14 million cars and find 10 billion euros in savings by 2022. New strategic plans for all three car companies are in the works.

With stability in sight, it's said Senard wants to succeed where Ghosn failed — a full-fledged merger between Renault and Nissan with talks to begin "as soon as possible." Ghosn's pursuit of a merger last year in attempt to make the 20-year-old alliance "irreversible" is part of what led to his downfall, with Nissan executives including CEO Hiroto Saikawa against the push.

The new effort is presented as larger scale being the only way for the alliance to take on companies like Volkswagen and Toyota. But the Nissan-Renault-Mitsubishi trio sold 10.76 million cars around the world last year, second to Volkswagen with 10.83 million sales, ahead of Toyota with 10.39 million. If Nissan hadn't suffered a 2.8 percent dip in sales, the alliance would have taken the top spot.

If a little scale is good that means more is better, right? Pulling Fiat Chrysler into the alliance would add around 5 million annual sales, and would be another move in Ghosn's footsteps. The former honcho is said to have "held talks with FCA" about some kind of union within the past three years. The French government, which has a 15 percent stake in Renault and double voting rights, shut down the initiative.

It's not clear if FCA will be an independent company by the time a potential Nissan-Renault merger closed, though. FCA is open to a union, CEO Mike Manley having said at Geneva, "We have a strong independent future, but if there is a partnership, a relationship or a merger which strengthens that future, I will look at that."

Groupe PSA, the parent company of Peugeot that's still processing its purchase of Opel, has already met with FCA Chairman John Elkann to discuss a transaction. According to the Wall Street Journal, Elkann and the Agnelli family that controls FCA declined the latest proposal partly because of Peugeot's desire to finance a transaction with stock, which would mean more FCA exposure to a mature European market where FCA is already having issues. Beyond that, the FT said Elkann had met with "several rivals." With so many interested parties, something seems bound to happen.

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