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Nissan May Have Seriously Damaged Chrysler’s Future

Industry News / Comments

Blame Nissan if FCA ends up in financial trouble.

While the initial autopsy report of the now-dead Fiat Chrysler-Renault merger concluded that the French government's unwavering demands are what led FCA to cancel the deal, new evidence is coming to light claiming that France is not really to blame. According to a report by US News, there was another player that influenced the deal's cancellation. But that didn't stop both automakers from being quick to blame the French. FCA came out with a statement that read, "It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully."

Renault issued a statement of its own that gave us slightly more insight into what was presumably a tense atmosphere in the conference room. "The Board of Directors was unable to take a decision due to the request expressed by the representatives of the French State to postpone the vote to a later Council," said the French automaker.

Combining the two accounts, we can conclude that the French government asked to delay the vote to approve the merger for one reason or another. And that the request for a delay was apparently enough to convince FCA to call it quits on the deal.

But the USN report instead claims that Nissan, a major Renault partner, was the reason the French government wanted to delay the deal. If you need a refresher, Nissan and Renault are partners that each own sizable portions of each other. Nissan owns 15% of Renault, though its shares don't come with voting power, while the French carmaker owns 43.4% of Nissan with full voting rights. And while these numbers make it appear like Nissan didn't have much leverage in the deal, the Japanese automaker did have something that FCA desperately needs: advanced technology.

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Given that the entire point of the merger was for FCA and Renault to get a leg-up on the competition by advancing both automakers' electric and autonomous vehicle technology, and because Nissan is far ahead in both areas - its electric Leaf and advanced ProPilot driver assist technology being examples of that - it actually had a pretty big bargaining chip that it used to sway the deal.

As we know, Nissan wasn't prepared to give FCA its technology without fair compensation. But with the deal giving Renault much more control over Nissan (Nissan's share in Renault would have dropped to 7.5% if the deal went through), FCA just figured it could eventually force the Japanese automaker into a merger. And as the story goes, the French government preferred to actually ask Nissan for its blessing before going through with the merger. That delay France apparently asked for? It was to fly to Tokyo and sit down with Nissan for that talk.

But apparently, even the notion of trying to get Nissan to compromise was enough to get FCA to back out. We have yet to learn exactly why, but it likely has to do with the fact that FCA knew it couldn't get ahold of Nissan's technology without strong-arming the Japanese automaker into coughing it up.