How Fiat Chrysler’s Proposed Merger With Renault Crashed

https://www.wsj.com/articles/how-fiat-chryslers-proposed-merger-with-renault-crashed-11559860056

by blegh • 7 years ago

28 50 7 years ago

wsj.com

neonate• 7 years ago

http://archive.is/mZuEc

slimypi• 7 years ago

Gooood bless you sir!

tyingq2• 7 years ago

Are the current Renault vehicles competitive? From the US, so I don't have much insight into the brand outside of Nissan.

petre3• 7 years ago

Yes, they are cheap. Not particulary reliable but okay, kind of like most French cars. They'll get you from point A to point B. They've got EVs. If you want a better trim you buy Nissan, which is more and more like an overpriced Renault. Not what they used to be. I remember the old Patrol GRs, built like a tank.

GordonS• 7 years ago

My personal experience of French cars is that they're cheap, but you get what you pay for. I recall a Renault Clio I had several years ago, bought new, where almost immediately after the 3 year warranty expired the problems stated - a door handle literally came off in my hand, the gear knob came off in my hand, and numerous electrical problems occurred.

I made the mistake of buying French cars for years after that (because they were cheap, and I guess I kind of am too!), but eventually learned my lesson.

geff82• 7 years ago

As a Renault driver I can say: much cheaper than German cars, the latest generation models have very advanced technology, they are reliable and they are quite comfortable. Also, some models have a really good design. The list price is medium-high, but high rebates are the norm. I never thought I would buy Renault - but the current model range has its merits.

nxoxn• 7 years ago

The merger may have helped the companies technologically but from my naive perspective it seems like what each of the companies need more than anything is a stronger QA department. From what I hear about Renault they are a little shoddy and I know from personal experience the level of quality from Jeep/dodge/ram/Chrysler.

Also, typically most companies only want to buy Jeep when looking at FCA because it’s the real money maker from what I hear. I wonder if a merger would ultimately lead to companies like Chrysler being shuttered due to redundancy. That’d be a big loss of jobs.

And on another side note it’s intriguing to think about a company that would have spanned four countries and how so many different personalities and cultures would have been able to work together.

tyingq2• 7 years ago

"Typically most companies only want Jeep when looking at FCA because it’s the real money maker from what I hear"

The Ram trucks are 3rd behind Ford and Chevy in sales, but only very slightly behind Chevy. And way ahead of number 4, Toyota trucks. I imagine that's attractive also.

kgwgk2• 7 years ago

Jeep (34% in 2018) and Ram (16%) account now for more than half of the sales of the group. In units, because in dollars it will be more and in earnings probably much more (but I don’t think the company discloses that info).

bluedino2• 7 years ago

RAM is ahead of Chevy now but still behind Chevrolet+GMC

nimbius• 7 years ago

Disclosure: im an automotive mechanic for a chain of midwest shops. Chrysler has been the "frat boy on probation" for nearly 40 years now. Renault was wise to reconsider what they would get.

wind back the clock to Daimler Chrysler and youll see there was nothing but mistrust from the start. German execs wanted an inroad into an american market segment that their luxury brands couldnt target at the time, and Chrysler wanted cash and technology. In the end, Daimler wound up with almost nothing in terms of IP or licensing, and Chrysler got the E class for its charger and challenger. Right down to the windows that roll down when you exit and enter by a few centimeters.

Fiat was at least pragmatic about its interaction and kept Chrysler at arms length. they got the GM fiat small platform developed almost entirely for them as they pumped cash into chrysler. The bitter irony here is that Chrysler once partnered with Maserati to get them off the ground, and now the same group is basically taking them to the cleaners. the promasters made it to the states as basically rebadged Ducatos basically at cost. Chrysler saw very limited revenue from it.

Chryslers other big problem is they are market-blind. Their strong suits are already dominated by fiat. Americans want reliable cheap cars that are good on gas, but things like the Charger RT and Hellcat challenger are loss-leaders that arent doing much of anything but filling press releases and patching the bald spots on the dwindling boomer market that remembers hellcat (and can afford it.)

Shivetya• 7 years ago

Fiat got Chrysler to get Ram and Jeep. Ram took off very well and recently had landed many accolades for their trucks. Jeep turned around nicely but has seen a slide for the last few quarters but has a solid foundation of vehicles to include their first PHEV and pickup. Chrysler/Dodge are mostly sustained by their minivans. Chrysler/Dodge was the first of the American brands to ditch sedans. Ford and GM followed.

Challenger/Charger are FCA's pony cars kept to compete with Camaro and Mustang. Combine the two FCA cars with their sibling the 300 and that was nearly two hundred thousand sales, not bad for an old platform. What keeps them going, they don't get stuck with the same boring colors year to year and get other tweaks people want from them. However they are one of the biggest risk factors for FCA too as they are vulnerable to fuel prices.

Renault simply is not a good fit because getting Renault means taking France too and that would pretty much sink them in legacy costs and employment structures. The better opportunity is to look to both China but locally to move East into the long gone Warsaw pact states.

FCA's real loss was the passing of Marchionne before he could do an orderly and planned handing off control to a picked successor.

petre3• 7 years ago

These models won't sell well in former Warsaw Pact states. Most of them are in the EU now and fuel is quite expensive. People in those states buy mainly used German cars, mainly diesels, plus cheap domestic cars (Dacia and Skoda) and French cars (Renault and PSA brands). They'd probably sell in North Africa and maybe the Arabic peninsula but that's debatable. The Emiratis are so well off that their police drives Lamborghinis, so I pretty much doubt they'll buy Dodge Chargers. China will just copy whatever model and produce a lookalike at 1/3 the price. They did it with the Range Rover Evoque and other cars.

jdhn• 7 years ago

things like the Charger RT and Hellcat challenger are loss-leaders

How is FCA not making a profit off of them, especially the Hellcat? The platform that they ride on has to be paid off by now due to its age, and the Hellcat sells at a premium compared to the other products in the FCA lineup, with the exception of high trim Ram 1500/2500/3500's.

rpiguy• 7 years ago

Profits from RAM and Jeep kept FCA alive for a decade while Fiat floundered. Consumers do not want cheap, reliable cars that are good on gas - they want SUVs. Even Toyota knows this and has three times as many SUV models than cars. Fiat and Alfa sales are down in the US again almost 30% but RAM and Jeep are selling like gang busters.

Dodge and Chrysler brands sales suffer primarily because they lack SUVs.

stjohnswarts2• 7 years ago

Yep Americans want SUVs and Trucks mostly these days. Most people who want cars either want cheap/gas efficient ones (commuters/college students) or muscle cars. The 4 door sedan is in a death spiral

coredog64• 7 years ago

Renault did a deal with AMC/Jeep/Eagle in the late 80s. The Renault 21 was initially imported as the Renault Medallion and then renamed as the Eagle Medallion.

https://en.m.wikipedia.org/wiki/Eagle_Medallion

nobrains• 7 years ago

Renaults are the only cars sold in the middle east whose entire range have steering mounted speed limiters. I love that feature.

sl1ck7314• 7 years ago

When you say speed limiter are you referring to cruise control? Or an actual speed limiter that won't let you go over X kph with your foot on the pedal?

If the latter, it seems like a strange feature to have/want.

seszett• 7 years ago

Cars usually have both at the same time. I rarely use it but I can see the appeal of a speed limiter for people who don't pay much attention to their speed but just want to be sure they don't get flashed by a speed cam.

chrisseaton3• 7 years ago

If the latter, it seems like a strange feature to have/want.

Seems dangerous - to not be able to accelerate out of a collision in an emergency if that is the safest thing to do.

Theodores2• 7 years ago

Although Renault have joint ventures and plenty of operations around the globe they are part owned by the French government and that government are keen to hold on to their auto sector. Their sector is different to what the German marques chase on the international stage, however, French cars are very popular in France. Whatever government is in Paris they are obligated to defend the French auto sector, they would be very unpopular if they did not.

Meanwhile, what does FIAT make in Italy these days?

FIAT get cars made in the former Eastern Europe, slap an Italian flag on and pass off the product as having Italian design. That is what motorists buy into, the Italian style and not the Italian workmanship. They don't care if the tin box is made in Timbuktu, so long as it expresses their personality in some way then they will buy it.

Italy has gone the way of the British auto sector, they have lost the ability to have Italian companies making mass market cars in actual Italy. Sure there are few thousand Ferraris and other lifestyle accessories churned out but those FIAT 500 cars for the ladies are not made in Italy. Those days are over.

Aside from the poor communication between Renault and Nissan, the proposed deal strikes me as over pushed by the FCA management. It went down with the French establishment as well as the post-Brexit British idea of outsourcing the NHS to American private healthcare providers. A complete non-starter because the management was not a cultural fit. Having Renault thrown in with some brash American led FCA was not on the table. The publicity for the merger was over-eager, as if that would make it happen by making it appear the deal was as good as done.

It is important to understand how the 'captains of industry' work. They are capitalists, not Marxist social workers. They don't care about making jobs or even delivering a product for the regular working/middle class person. They are not cast from the same stuff as Henry Ford. They get their bonuses for merger and acquisition activity and move on to the next deal.

Camillo2• 7 years ago

Meanwhile, what does FIAT make in Italy these days?

Quite a bit, it turns out:

https://en.wikipedia.org/wiki/List_of_Fiat_Group_assembly_si...

Theodores2• 7 years ago

The Panda and the 500x. Those are the two models FIAT make in Italy with the FIAT badge on them.

The wider group makes Maserati and you don't see many of them in your supermarket car park.

The 500x is not to be confused with the multitude of other 500 models. As in the ones you actually see.

As for the Panda:

"The decision to manufacture the car in Italy, instead of manufacturing it with the cheaper workforce in Tychy, Poland, was taken because of the agreement between Italian Prime Minister Mario Monti and Fiat directors not to close down any of Fiat's plants in Italy."

Almost forgot about the Ducato van.

This gets more interesting as it is a joint venture with PSA. There are Peugeot and Citroen versions so exactly how a merger would work out with Renault could be interesting. Renault partner with Mercedes in the category.

So a few thousand Maserati things, the vans and a few cars kept being made in Italy so as to keep the government happy. It's a lot but not a lot.

Anyway, it is just final assembly we are talking about. Where do the components come from? The final bit of putting the jigsaw puzzle is what we all think a car factory is but there is always 10x the jobs in the component suppliers. Get rid of the factory though and the local demand for the components is gone. I suspect all the components business for FIAT has moved over to Poland and elsewhere for the same reasons - people don't have rentseekers demanding vast sums out of them every month in these 'lower wage' economies.

bluedino2• 7 years ago

Dodge has the oldest lineup there is:

https://jalopnik.com/the-entire-dodge-car-lineup-is-old-as-h...

How Fiat Chrysler’s Proposed Merger With Renault Crashed

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