Fiat Chrysler and Renault merger off as Nissan threatens to quit alliance

Fiat Chrysler has withdrawn its US$35 billion dollar merger offer with Renault, blaming "difficult political conditions" with the French government.

The merger would have been one of the biggest automotive industry moves ever, and would have created the world’s third-largest car group.

Fiat Chrysler (FCA) pulled the 50/50 merger deal - which it said would have “delivered substantial benefits to all parties” - saying only that “it has become clear that the political conditions in France to not currently exist for such a combination to proceed successfully.”

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The French side needed more time to approve the deal, which Nissan’s Japanese CEO said “would require a fundamental review of the existing relationship between Nissan and Renault”. The French government, which owns 15 per cent of Renault, was not willing to proceed without a guarantee that the deal would not cause Nissan to exit its alliance.

Other concerns included the merger guaranteeing French jobs, and complications relating to FCA merging with a partially state-owned enterprise.

The Nissan-Renault alliance has been in a tumultuous state since ex-Nissan/Renault CEO Carlos Ghosn was arrested in Japan over alleged under-reporting of his earnings and the misuse of company assets.

Nissan executives allege that Ghosn misused the company's assets.

Ghosn’s lawyer maintains that the charges against him were in relation to an internal Nissan matter. He has been released on bail and re-arrested several times.

Nissan’s Japanese executives have expressed frustration that, under Ghosn’s leadership, the brand had been appealing too much to fleet sales in certain markets, tanking its value. The Japanese have resisted further integration with Renault in the past, and fear losing independence to the European giant.

Attempts to curtail Renault’s influence and control over Nissan have been ongoing, with reports earlier this year claiming that even the Japanese government was interested in keeping Nissan independent, preferably even reducing Renault's 43-per-cent ownership in the storied Japanese brand.

Renault’s technology partnership with Mercedes-Benz parent company Daimler could also be on the fritz, as the German giant's incoming CEO Ola Kellenius does not have plans to renew previous agreements.

The X-Class and Renault Alaskan come out of the group's wider tech share agreements.

Fiat Chrysler is left without a merger partner for the time being, although it had previously also been in talks with Renault’s primary rival, PSA (owner of Peugeot, Citroen, and Opel).

The Nissan-Renault-Mitsubishi & Daimler cooperation has seen vehicles like the Mercedes-Benz X-Class and Infiniti Q30 share Nissan/Mercedes underpinnings, as well as the co-development 1.3-litre turbocharged petrol engine family which is used across Renault and Mercedes-Benz small cars.

The Infiniti Q30 and QX30 run under Nissan's premium marque, but are underpinned by Benz chassis and powertrains.

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