FCA, Renault Merger Falls Through Abruptly

• Comes as a surprise as FCA itself had proposed to join hands with Renault.
• Renault was apparently reviewing the proposal.
• The resulting automotive company would’ve been the third-largest in the world.

The proposed 33 billion euro( around Rs 26 lakh crore) FCA-Renault merger has fallen through, as the FCA Group has unexpectedly backed out of the plan. In an interesting turn of events, FCA, which itself had forwarded the proposal to join hands with Renault, has backed out from it. According to a press release by the FCA group, “political conditions in France do not currently exist for such a combination to proceed successfully”.

To recap, Fiat Chrysler Automobiles (FCA) was looking forward to joining hands with Renault and had proposed an equal-share merger. The resulting company would have been the third-largest automotive conglomerate in the world with sales nearing 8.7 million units a year. Renault, meanwhile, had issued a press release saying it was reviewing the proposal.

Going by the proposal tabled by FCA, the two brands were supposed to share resources and also co-develop cars in the future. And while everyone was expecting a response from Renault’s board members, Fiat backed out.

Though the “political conditions” cited by FCA are still not clear, Renault had earlier released a statement saying it was postponing the decision at the request of representatives from the French state. Renault has to abide by the French government as it owns 15 per cent of the automotive brand.

According to reports, there was also some unrest among Renault’s Japanese partners in the alliance. This is not FCA’s first shot at an alliance as the brand has tried joining hands with various other carmakers in the past. And even with this merger falling through, the group might look at other global markets outside Europe, especially China, for a worthy partner.