Fiat Chrysler Automobiles is considering a tie up with Renault that could eventually lead FCA to becoming part of the Renault-Nissan alliance, according to reports.
FCA is poised to announce a partnership with Renault as soon as Monday, people familiar with the matter told Bloomberg.
French newspaper Le Figaro reported that Renault's board will meet on Monday morning at 0800 local time (0600 GMT) to discuss a possible tie-up with FCA. A Renault spokesman declined to comment on whether a board meeting will be held on Monday.
The deal may include an exchange of equity, Bloomberg said. Nissan is not involved, though the transaction would allow the automakers to join forces later.
The Wall Street Journal, New York Times and Reuters also reported that FCA and Renault were discussing a partnership.
The talks are at an advanced stage but could still collapse, especially amid the tensions between existing partners Renault and Nissan, the reports said.
A tie-up between Fiat Chrysler and Renault could address some of the main weaknesses of both automakers.
Pressure for consolidation among automakers has grown with the challenges posed by electrification, tightening emissions regulations and investment-thirsty technologies for connected and autonomous vehicles.
FCA and Renault have a combined market capitalization approaching 33 billion euros ($37 billion) and total global sales of 8.7 million vehicles. Besides bringing greater scale, a tie-up could help patch flaws on both sides.
FCA has a highly profitable North American RAM trucks business and Jeep brand but has been losing money in Europe, where it may also struggle to keep pace with looming tougher carbon dioxide emissions curbs.
Renault, by contrast, is an electric-car pioneer with relatively fuel-efficient engine technologies and a strong presence in emerging markets, but no U.S. business.
FCA and Renault could potentially combine operations in Europe, where the companies compete directly in small and midsize cars, the New York Times said. One option could be developing the underpinnings of cars jointly and manufacturing vehicles in each other’s plants, both money-saving moves, the paper said.
Any tie-up would likely face political and workforce hurdles, particularly in Italy. Most of FCA's European plants are running below 50 percent capacity.
The plan under consideration could involve some transfer of equity, one source told Reuters. "This isn't just another partnership - it's more than that," the source said.
A tie-up between FCA and Renault would not preclude a consolidation of Renault's alliance with Nissan, one of the sources said.
A partnership that included Nissan would vault the ensemble to the rank of global No.1 carmaker with 13.8 million annual sales. It would also maintain a foothold in China, where both FCA and Renault are marginal players.
FCA has also been holding cooperation talks with PSA Group about sharing platforms but the talks with Renault have moved beyond sharing technology and have advanced faster than those with PSA, according to the Financial Times.
FCA Chairman John Elkann and CEO Mike Manley have made several trips to Paris since the beginning of the year for business meetings as part of their search for ways to make the carmaker stronger, Bloomberg said.
FCA and Renault did not comment on the reports.
PSA said it is open to "opportunities that would create value on a long-term basis," but based on 2018's financial results. "There is no hurry to finalize any partnership," PSA said.
Bloomberg and Reuters contributed to this report