Sales are soaring, so why does FCA still need Renault?
Earlier this summer, Fiat Chrysler Automobiles abruptly abandoned its proposal to merge with French automaker Renault. Although many industry analysts praised this potential merger, FCA claimed there were too many obstacles being put into place by – big surprise – the French government. Nissan was also reportedly not entirely onboard with the plan because it already felt like a sidelined player in the Renault-Nissan-Mitsubishi alliance. Could a deal still happen? Maybe, as there are reports claiming Renault is considering a cut in its Nissan stake, but nothing is for certain. What is certain, however, is FCA's currently strong financial position, thanks mainly to excellent Jeep and Ram sales.
According to Automotive News, FCA CEO Mike Manley made clear the automaker has "a relatively robust business plan that survives with or without that type of merger," which we acknowledged it "clearly added very, very significant synergies."
One of the main reasons why an FCA-Renault merger was quite attractive was because the latter wants to increase its European market presence and improve its electrification status, two areas where Renault is a leader. Renault wants access to North America. Having two all-powerful brands like Jeep and Ram is highly attractive as well, and here's why: even without a merger, FCA claims it achieved record second-quarter earnings in North America, an increase by 12 percent to $1.74 billion. Ram's US sales were up by 28 percent through June and the new Jeep Gladiator is already proving to be a smashing success. Even without a merger, FCA is doing just fine thanks to its off-road brands.
The question is how long can this be sustained given the likelihood of increased demand for EVs in the near future. That's one reason why FCA hasn't completely shut the merger door. Making this happen appears to be in Renault's hands. Not only does it need to get the French government to cooperate, but it also needs to repair relations with Nissan. In the meantime, FCA will continue building Ram and Jeep vehicles at a record pace to keep up with demand.