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Renault and French govt trade blame over failed Fiat deal

2019-06-13 16:57
renault fca merger

Image: Reuters

French officials rejected Thursday any blame for the abandoned tie-up of Renault and the US-Italian automaker Fiat Chrysler, a day after Renault's chairman said the government had blocked a vote on a deal that would have upended the global automotive industry.

"We did not derail the wedding between Renault and Fiat," French Finance Minister Bruno Le Maire told France Info radio ahead of a meeting with Renault chairman Jean-Dominique Senard.

Senard told shareholders at Renault's AGM on Wednesday that board directors representing the French state, which owns 15% of the carmaker, had demanded more time to study the tie-up.

In particular the government wanted to clarify the future role of Renault's Japanese partners Nissan and Mitsubishi, which had been informed only at the last minute of the potential mega-merger with Fiat.

"Rarely have I seen a merger project able to produce such significant synergies, and without having negative consequences in terms of jobs and livelihoods," Senard told shareholders.

He also revealed that it was Le Maire himself who suggested he reach out to Fiat executives on a possible deal.

But just over a week after proposing a merger that got a warm welcome from Renault and its investors, Fiat's president John Elkann said trying to push ahead with the deal would be "unreasonable".

The deal's sudden collapse was a stunning blow to Senard, who was brought in just months ago to help get the carmaker back on track after the shock arrest of former Renault and Nissan boss Carlos Ghosn last November in Tokyo.

Renault officials later had to deny claims he was considering resigning over the matter.

'Didn't veto'

But Le Maire said Thursday that the French state, which owns 15% of Renault's stock, "didn't veto the project."

"We simply asked, after seeing that Nissan was not going to give its backing, for five more days to study the operation," he said.

Le Maire defended his request for more time as "reasonable," saying the scope of the merger "required that the Japanese partner be associated with it and in the end in favour of it."

"Our strategy has always been... the reinforcement of the Renault-Nissan alliance. It's at the heart of Renault's as well as Nissan's profitability. We're not going to change our strategy every five minutes," he said.

He later met with Senard at the finance ministry to discuss the automaker's strategy going forward.

"They had an excellent discussion regarding the future of both Renault and the alliance" with Nissan and Mitsubishi, an official in Le Maire's cabinet told AFP.

"Le Maire renewed his confidence in Senard and reiterated that the goal is to consolidate the alliance with Nissan," he said.

Renault declined to comment on the meeting, acknowledging only that the two men had spoken regularly, including before Wednesday's AGM.

Try again?

Senard did not rule out trying again to reach a deal with Fiat Chrysler, telling shareholders that "to my mind, this project remains a remarkable and exceptional proposal".

"As to what the future holds, I can't say," he added.

The merger would have created the world's third-largest automaker, surpassing both Volkswagen and Toyota in annual vehicle sales.

But including Renault's alliance partners Nissan and Mitsubishi, it would have been an industry behemoth selling some 15-million cars and trucks a year.

A combination would also have allowed them to pool investments into costly electric motor and autonomous driving technologies, an area where Renault has spent aggressively while Fiat has lagged behind.

It's a key challenge for the industry as governments worldwide tackle carbon emissions and the mobility challenges stemming from rapid urbanisation.

A merger would also have bulked up their positions in Europe, while giving Renault access to the crucial North American market and Fiat a foothold in Latin America, Russia and Asia.

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