Fiat Chrysler proposed on Monday a merge with Renault, creating the third biggest automaker in the world. This proposed merger will save billions of dollars for both companies to make new electric and autonomous vehicles.
The merged company would change the global automobile industry making producing 8.7 million vehicles a year. This will mean surpassing General Motors and follow behind Volkswagen and Toyota. This would also see a 10% increase in shares.
Renault’s board met Monday at its HQ in the outskirts of Paris to discuss the proposal and said afterward that Renault will take a very deep and close look at the proposal “with interest.”
The proposed merger would save 5 billion euros ($5.6 billion) for the two companies each year. This will be achieved by sharing research, purchasing costs and other significantly costly resources. There will also be no or minimal impact on jobs and no plant closures
Fiat Chrysler is stronger in the U.S. and SUV markets, while Renault is more popular in Europe with small, crossover and electric vehicles
The French government owns 15 percent of Renault said this would be a “favorable” idea but will want to study its implications more carefully.
Investors reacted to the proposal, growing shares in Fiat Chrysler up 10 percent and Renault up by 14 percent.