Sunday, May 26, 2019

RENAULT & FIAT CHRYSLER? WHAT NEXT?

Neal Boudette
New York Times automotive writer, Neal Boudette, who is an old friend of mine from Detroit, when he used to write for The Wall Street Journal, has just revealed that Renault is in talks with Fiat Chrysler Automobiles about a possible merger, joint venture, partnership, or something that draws their future R & D together, to create economies of scale, new technologies and cost savings.


Sergio Marchionne
Can’t say I’m surprised. Fiat Chrysler (FCA), under the late Sergio Marchionne kept insisting it wanted (desperately needed) a JV, merger, etc. with another carmaker, as it was in debt to the tune of USD$6 billion and didn’t have the cash to create a new line of FIAT cars, let alone anything in the way of EVs or autonomous vehicles.

Mike Manley
Quite frankly, even under the new CEO, Mike Manley, FCA is a basket case. It has vehicles which make money (Jeep and Ram), but in terms of keeping FIAT relevant in Italy, the cupboard is bare. 




At the moment it has a single passenger car platform (despite the very successful FIAT 500), and it has about eight models spun off that one platform which is a very old design.

The FIAT 124, or Abarth 124, did not realize the sales targets set for the sports car spun off the new Mazda MX-5, so it has gone to God, and now Italians are increasingly buying cars from a number of European manufacturers, because FIAT’s cars are old, way behind in the latest technologies, and there’s no way to cost-effectively replace them.

Mike Manley says FCA has paid down its debt, and the margins on Jeep/Ram are sufficient to ensure it doesn’t need to find a partner. Yes, ho-ho. Basing the future of one of the former American Big Three on an SUV and truck line is taking the carmaker right to the edge of financial survival.

Jean-Dominique Senard (Renault) & Hiroto Saikawa (Nissan)

On the other hand, Renault needs to find a partner who will be nicer to them than its alliance partner Nissan. Hiroto Saikawa keeps talking about Nissan’s ascendancy, and how it needs a fairer JV with Renault, but quite frankly Nissan doesn’t have the depth of management talent to split up its connection with Renault, and go it alone. When I think of Nissan's current management lineup - headless chickens immediately come to mind.

Carlos Ghosn knew that, and his efforts to push through a merger with Nissan was the reason he spent a long time in jail on fake charges trumped up by Nissan, and now prowls his Tokyo house with an ankle collar to stop him leaving the country.

Nissan (or more precisely, Saikawa) may have stopped the merger talks, but Renault’s new Chairman and CEO are secretly holding to the Ghosn philosophy that a full-blown merger is what is needed to save both companies from disappearing down the plughole.


It might be a powerful union, but it cannot defend itself against the rapid technological changes we are seeing – and the JVs and mergers prevalent in a cash-strapped car industry.

Nissan knows that passenger cars are ‘on the nose’, but Saikawa keeps talking about Nissan’s success with its cars. That only demonstrates very clearly that he’s living in the past.

Nissan Qashqai
Also, even though Nissan offers a plethora of SUVs – they are very, very old, and (aside from the Qashqai, built on the jointly-developed Renault/Nissan CFM platform), the cost of replacing all of them will be a major cash drain. 

Nissan has a big cash pile, but when it’s saddled with inept management, that may not be enough to save it.

Hiroto Saikawa
Renault can only hope Saikawa has a ‘vision’, and can steer the Alliance into calmer waters, but I doubt it. His every action to date reveals he’s just an old ‘warrior’ dedicated to Nissan’s primacy in any JV.

I personally think Nissan is stuffed, so Renault probably has nothing to lose in talking to FCA – but with FCA’s inherent weaknesses, I hope the new Renault management is careful about its negotiations. I think FCA needs Renault, much more than the opposite scenario.

Then, of course, there's another scenario blowing in the wind!


No comments:

Post a Comment