Asia/Kathmandu

Renault to make a decision on merger discussions with Fiat Chrysler

The authority of French car giant Renault is anticipated to decide Tuesday to begin the process of merger talks with Fiat Chrysler which may create a new global giant spanning the United States, Europe, and Japan.

US-Italian cluster Fiat Chrysler proposed a “merger of equals” with Renault last week, that has been welcomed by financial marketplaces and has been given a conditional green light by the French government.

A merger will be “a real opportunity for the French auto industry,” Finance Minister Bruno Le Maire informed AFP on Friday of a tie-up which would include the flagship brands along with Alfa Romeo, Jeep, Maserati, Dacia, and Lada.

After preliminary speak over the last week, Renault directors are set to meet on Tuesday and choose whether to enter into formal conversations, which most observers expect it to do.

I joined, the two companies would produce 8 .7 million automobiles a year, creating an industry powerhouse with an anticipated market value of some 36 billion euros ( $40 billion).

But Renault previously has an alliance with Japan’s Nissan and Mitsubishi, and the merged mega-group would be by far the world’s greatest, selling some 15 million vehicles, surpassing Volkswagen and Toyota, which sell around 10 .6 million each.

Nissan, a long-time Renault partner, worries being sidelined by the contract and its chief executive, Hiroto Saikawa, warned Monday that a merger “would significantly alter the structure of our partner .”

Any new collaboration would require a “fundamental review” of their partnership, said the boss of Nissan, whose 15 percent stake in Renault would be diluted to 7 .5 percent under the proposed deal.

Behind the curtain at the Yokohama-based firm, some executives trust the merger talks could further strain relations with Renault, that have been hit by the arrest in Japan of former CEO Carlos Ghosn, the architect of their alliance.

“It’s an ill-thought-out and poorly conceived plan,” one source close to Nissan told AFP last week on condition of anonymity.

Renault authority chairman Jean-Dominique Senard traveled to Tokyo last week to try to smooth over ties in what has been a sometimes tricky marriage between the two partners over the last two decades.

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