Fiat Chrysler set to unveil Renault tie-up Monday, reports say

MILAN -- Fiat Chrysler Automobiles is poised to announce a tie-up with Renault as soon as Monday, opening a path for the Italian-American automaker to eventually become part of the Renault-Nissan alliance, reports said.

The deal may include an exchange of equity, Bloomberg reported. Nissan isn’t involved, though the transaction would allow the carmakers to join forces later, the people said. 

Reuters sources said the announcement could provide some concrete, early details but added the situation was still "fluid."

French newspaper Le Figaro reported that Renault's board will meet on Monday morning at 0800 local time (0600 GMT) to discuss a possible tie-up with FCA.  A Renault spokesman declined to comment on whether a board meeting will be held on Monday.

The Wall Street Journal, New York Times and Reuters also reported that FCA and Renault were discussing a partnership.

The talks are at an advanced stage but could still collapse, especially amid the tensions between existing partners Renault and Nissan, various reports said.

A tie-up between Fiat Chrysler and Renault could address some of the main weaknesses of both automakers.

Pressure for consolidation among automakers has grown with the challenges posed by electrification, tightening emissions regulations and investment-thirsty technologies for connected and autonomous vehicles.

FCA and Renault have a combined market capitalization approaching 33 billion euros ($37 billion) and total global sales of 8.7 million vehicles. Besides bringing greater scale, a tie-up could help patch flaws on both sides.

FCA has a highly profitable North American RAM trucks business and Jeep brand but has been losing money in Europe, where it may also struggle to keep pace with looming tougher carbon dioxide emissions curbs.

Renault, by contrast, is an electric-car pioneer with relatively fuel-efficient engine technologies and a strong presence in emerging markets, but no U.S. business.

Together, Renault, Nissan and third partner Mitsubishi sold 10.76 million passenger cars and light trucks last year, putting them on par with Volkswagen Group and Toyota.

FCA and Renault could potentially combine operations in Europe, where the companies compete directly in small and midsize cars, the New York Times said. One option could be developing the underpinnings of cars jointly and manufacturing vehicles in each other’s plants, both money-saving moves, the paper said.

Any tie-up would likely face political and workforce hurdles, particularly in Italy. Most of FCA's European plants are running below 50 percent capacity.

The plan under consideration could involve some transfer of equity, one source told Reuters. "This isn't just another partnership - it's more than that," the source said.

FCA has also been holding cooperation talks with PSA Group about sharing platforms but the talks with Renault have moved beyond sharing technology and have advanced faster than those with PSA, according to the Financial Times.

FCA Chairman John Elkann and CEO Mike Manley have made several trips to Paris since the beginning of the year for business meetings as part of their search for ways to make the carmaker stronger, Bloomberg said.

FCA and Renault did not comment on the reports. PSA said it is open to "opportunities that would create value on a long-term basis," but based on 2018's financial results. "There is no hurry to finalize any partnership," PSA said.

Falling sales in the big three regions -- China, the U.S. and Europe -- have brought fresh urgency to the cause of consolidation championed for years by the late former FCA chief, Sergio Marchionne, and deposed Renault-Nissan Chairman Carlos Ghosn.

FCA has been looking for a tie-up since Marchionne created the Italian-American carmaker in 2014. A year later, Marchionne became vocal on the auto industry’s need for consolidation in an analyst presentation called “Confessions of a Capital Junkie.”

Marchionne argued then that carmakers waste 2 billion euros a week by duplicating investments they could share. At the time, Renault-Nissan was considered the second-best fit for Fiat after General Motors, according to people familiar with the plan. GM rebuffed Fiat’s approaches.

Fiat also has history with French President Emmanuel Macron, which could help smooth the way for a deal given France’s 15 percent stake in Renault. In 2013 Macron, then a top adviser to President Francois Hollande, had preliminary talks with Fiat about a merger with troubled Peugeot.

Renault’s partnership with Nissan was thrust into the spotlight in November with the arrest of Ghosn, the chairman and architect of the alliance.

Bloomberg and Reuters contributed to this report