MILAN -- Fiat Chrysler Automobiles is poised to announce an operational tie-up with Renault SA as soon as Monday that could lead to a full merger of the French and Italian-American companies, creating the world’s third-biggest automaker.
The New York Times and The Wall Street Journal reported similar possibilities in stories published Sunday.
The deal could involve an initial exchange of equity, the people said, asking not to be identified because the discussions aren’t public. Renault’s existing alliance partners, Nissan Motor Co. and Mitsubishi Motors Corp., aren’t involved, although they would be invited at a later time to join forces with the merged Fiat-Renault, the people said.
The Times reported that, at a minimum, the two sides have agreed to share technology, intellectual property, supply chains and plants to develop and manufacture vehicles.
The talks with Fiat have moved ahead without Nissan, Renault’s 20-year partner, illustrating the intense pressure facing automakers to combine efforts and investments. A French drive to forge closer ties with Nissan, which has resisted proposals to join with Renault in a holding-company structure, will be put on hold for now, the people said.
Talks between Fiat and Renault have accelerated in recent days as negotiators found a way to structure a deal, the people said. Renault’s board is scheduled to meet Monday morning. Representatives from the two companies declined to comment.
With sales falling in the world’s biggest car markets, manufacturers are being pushed by regulators to electrify and reduce fleet emissions. They’ve also been forced to spend heavily on self-driving technology or risk getting left behind by new, deep-pocketed competitors such as Google's Waymo affiliate.
A Fiat-Renault agreement would hold the potential for extensive cost savings in Europe -- both through sharing investments and reducing costs in the struggling market. Almost one-third of Fiat’s global work force of 198,500 was located in the region at the end of last year, even though the company makes almost all of its profit in North America. Renault, which is 15 percent owned by the French government, counts on Europe for almost half its sales.
Together, the two companies made about 8.7 million cars last year, which would vault the pair past South Korea’s Hyundai Motor Co. and Detroit’s General Motors. The world’s two biggest automakers, Volkswagen Group and Toyota Motor Corp., each topped 10 million vehicles last year. Renault, with alliance partners Nissan and Mitsubishi, also reached this level.
Fiat would give Renault access to the North American market, while gaining clout in Russia, the French carmaker’s second-biggest market with its Avtovaz unit. Overall, Renault deliveries fell 5.6 percent to 908,348 vehicles in the first quarter, while Fiat Chrysler sales were down 14 percent to 1.04 million cars and light trucks.
Fiat also held initial talks with Peugeot owner PSA Group as it evaluates potential partners, the people said. PSA remains open to “opportunities that would create value on a long-term basis,” it said in an email.