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New automotive giant emerges: FCA proposes merger with Renault to form world's third-biggest car maker

The merger would create the world's third-biggest car maker

FCA has proposed a merger with French car maker Renault to form a new 50/50 business that would instantly become the world's third-biggest automotive manufacturer responsible for 8.7m sales annually.

The news was delivered via non-binding letter to the board of Renault, pushing the American/Italian company's interest in forming a combined business.

But it hardly comes as a shock; whispers of the proposed merger have been swirling for days, and the two companies concede they have already engaged in "initial discussions" about products, plants and locations. In its just-released press material, FCA is quick to point out the merger won't have an immediate impact on the combined company's plants, nor their employees, though the company does say it is targeting five billion Euro in "synergies".

The merger wouldn't derail Renault's existing alliance with Mitsubishi and Nissan, either, with FCA pointing out that combined, the alliance would now sell more than 15 million vehicles every year.

"The proposed combination would create a global automaker, preeminent in terms of revenue, volumes, profitability and technology, benefitting the companies’ respective shareholders and stakeholders," says FCA.

"The combined business would sell approximately 8.7 million vehicles annually, would be a world leader in EV technologies, premium brands, SUVs, pickup trucks and light commercial vehicles and would have a broader and more balanced global presence than either company on a standalone basis."

FCA - with a brand portfolio that includes Alfa Romeo, Abarth, Fiat, Jeep, Dodge, Chrysler, Ram, Lancia and Maserati - says the two companies would collaborate on global platforms and EV technology, as well as conventional powertrains and other in-car tech.

Existing shareholders will receive equivalent ownership of any new company, while the 11-person board would be made up of four FCA representatives, four Renault representatives, one Nissan representative, and two independent members.

"The combination would create a brand portfolio that would provide full market coverage with a presence in all key segments from luxury/premium brands, such as Maserati and Alfa Romeo, to the strong access brands of Dacia and Lada, and would include the well-known Fiat, Renault, Jeep and Ram brands as well as commercial vehicles," FCA says.

"Groupe Renault has a strong presence across Europe, Russia, Africa and Middle East, while FCA is uniquely positioned in the high margin segments in North America and is a market leader in Latin America. FCA’s evolving capability in autonomous driving, which includes partnerships with Waymo, BMW and Aptiv, is complemented by Groupe Renault’s decade of experience in EV technology where it is the highest selling EV OEM in Europe."

FCA says the merger would create a company that, from day one, would be the number four manufacturer in North America, number two in the EMEA region, and number one in Latin America.

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