Fiat Chrysler close to tie-up with Renault

Fiat Chrysler Automobiles is close to joining forces with Renault. (AFP pic)

MILAN: Fiat Chrysler Automobiles NV is set to announce a tie-up with Renault SA as soon as Monday, opening a path for the Italian-American automaker to eventually become part of the Renault-Nissan Motor Co alliance, according to people familiar with the matter.

The deal may include an exchange of equity, the people said, asking not to be identified because the discussions aren’t public. Nissan, Renault’s alliance partner for two decades, isn’t involved, though the transaction would allow the carmakers to join forces later, the people said.

With sales falling in the world’s biggest car markets – China, US and Europe – automakers are under intense pressure to combine efforts and investments as they develop expensive new technology such as self-driving cars and electric engines. Fiat has been seeking a partner for months, with talks focused on Renault and Peugeot owner PSA Group.

Renault has been trying to firm up its alliance with Nissan, which was shaken by the arrest of former Chairman Carlos Ghosn in November over alleged financial misdeeds. As he awaits trial, tensions have risen with Nissan executives resisting new attempts by Renault to cement ties.

A Renault deal with Fiat would put pressure on Nissan, while potentially making the resulting partnership more attractive. Talks have accelerated over recent days, as negotiators found a way to structure a deal.

Representatives from Fiat and Renault declined to comment.

Renault’s partnership with Nissan was thrust into the spotlight in November with the arrest of Ghosn, the chairman and architect of the global car-making alliance that also includes Mitsubishi Motors Corp.

FCA also held initial talks with PSA as it evaluates potential partners, the people said. Chairman John Elkann and Chief Executive Officer 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, the people said.

PSA 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,” according to an email statement.

The Financial Times reported on the talks on Saturday.