The French government, which owns 15% of Renault, is "favourable" to the idea of a merger with Fiat Chrysler but wants to study its conditions more carefully, especially in terms of "Renault's industrial development" and employees' working conditions, government spokeswoman Sibeth Ndiaye said on Monday.
Talks between Fiat and Renault have accelerated in recent days as negotiators found a way to structure a deal, the people said.
Pressure for consolidation among carmakers has grown with the challenges posed by electrification, tightening emissions regulations and expensive new technologies being developed for connected and autonomous vehicles. But if combined with output of Renault's existing alliance with Nissan and Mitsubishi, the total would be more than 15 million vehicles a year.
Italian Deputy Prime Minister Matteo Salvini said the proposed merger could be good news for Italy if it helped Fiat to grow, but it was crucial to preserve jobs.
Motor1.com has reached out to FCA for official comment and will update this post when a response is provided.
"It's an ill thought-out and badly conceived plan", fumed one source close to Nissan, who did not wish to be identified, in response to the Fiat-Chrysler "50/50" merger proposal that would potentially create the world's third-largest carmaker. She said the companies have been discussing a merger for weeks but the French government was only informed last week.
It was unclear whether the FCA-Renault deal talks would conclude successfully, the sources said. But with increasing government regulation and sales dropping in some of the world's biggest auto markets, the timing looks right for Renault to join forces with one of North America's Big Three. However, Renault recently said Nissan would have a negative contribution to its first quarter net income of 56 million euros.
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The proposal is to be reviewed by the Groupe Renault Board of Directors.
"Combination would create the third largest global OEM with 8.7M vehicle sales and a strong market presence in key regions and vehicle segments", said FCA in a statement released Monday morning.
Renault, by contrast, was an early mover in electric cars, has relatively fuel-efficient engine technologies and a strong presence in emerging markets, but no US business. It's worth bearing in mind, the Renault-Nissan-Mitsubishi Alliance reports combined sales.
The merged group would be chaired by Agnelli family scion John Elkann, sources familiar with the talks told Reuters, while Renault chairman Jean-Dominique Senard would likely become CEO.
Since arrested and accused financial misconduct, Carlos Ghosn was the architect of the successful Renault/Nissan/Mitsubishi alliance. PSA, widely seen as an industry consolidator, was off 3%.
No plant closures would be caused as a result of the tie-up, the carmaker said.
Marchionne argued then that carmakers waste 2 billion euros ($2.24 billion) a week by duplicating investments they could share.