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Fiat Chrysler And Renault Set To Enter Into A Tie Up

Fiat Chrysler And Renault Set To Enter Into A Tie Up
According to reports quoting sources, a tie up between Renault SA and Fiat Chrysler Automobiles NV is set top take place early next week which would allow the Italian-American automaker to ultimately be included in the largest auto alliance of the world between Renault, and Japans’ Nissan and Mitsubishi.
Reports said that an exchange of equity could be a part of the agreement. Sources reportedly said that Nissan would not be part of the current agreement even though it can later become part of the deal.
There is huge pressure on the global cutup companies to combine efforts and investments which is reflected in this deal which went on despite the tensions between Renault and Nissan. Along with drop in sale in some of the largest car market s of the world, auto companies are also being pushed by various regulators to manufacture more of electric cars and reduce emission making cars in their fleets. Companies are also at the same time being forced to make more investments in development of self-driving technology or else companies would be left behind companies surging ahead in this sphere such as Alphabet Inc.’s Waymo.
There was no comment from both companies.
In order to evaluate potential partners, Fiat also held initial talks with Peugeot owner PSA Group, said reports. PSA is still open to “opportunities that would create value on a long-term basis,” the company said in an email.
Consolidation in the car industry has been hastened by significant drop in sale of cars in the big three regions -- China, the U.S. and Europe.
In recent months, Fiat has been seeking a partner and has been focused on a tie up with Renault and PSA. According to reports, Fiat has been seeking ways to make the car maker stronger and since the beginning of the year, several trips to  Paris have been made for holding business meetings by Fiat Chairman John Elkann and Chief Executive Officer Mike Manley.
On the other hand, further enhancement of the two decade old partnership with Nissan is being attempted by Nissan. But those efforts have been impacted by the arrest of former Nissan and Renault chairman Carlos Ghosn last November over alleged financial misdeeds. That incident brought to light deep differences between Nissan and Renault and new proposals to further strengthen and expand the partnership from Nissan were rejected by the Nissan executives. Renault is trying to create a holding-company structure out of its partnership with Nissan.
Last year, the alliance of Renault, Nissan and Mitsubishi Motors Corp sold 10.76 million passenger cars and light trucks which was among the highest in the world and at par with the sale in terms of units for Germany’s Volkswagen AG and Japanese rival Toyota Motor Corp. If Fiat is added on to the alliance, the total number would reach about 15 million vehicles a year and it would ensure a strong presence of the alliance in all of the major global markets and its portfolio would have premium brands such as Jeep, Maserati, Alfa Romeo and Infiniti all bundled together.

Christopher J. Mitchell

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