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Is Stellantis Merging with Renault? | The Every day Drive

Generally, rumors are simply rumors.

Stellantis Merger
Is Stellantis Merging with Renault?

There’s a enjoyable new rumor bouncing across the automotive-industry speak machine, and if true, would-be critical information. The rumor? Stellantis and Renault are going to merge. Quantity three world automaker Stellantis (ranked by 2023 gross sales income), and quantity 20 automaker Renault (identical), are stated to be in discussions that might finish with the 2 carmakers merging into one massive completely satisfied auto firm, ideally sharing improvement prices and having fun with better economies of scale.

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Is Stellantis Merging with Renault?

There’s only one drawback with this story: It most likely isn’t true. Stellantis Chairman John Elkann has flat out denied the rumors, which appears to place the story to relaxation. Nonetheless, the concept of the 2 automobile firms coming collectively isn’t completely loopy. Right here’s why:

Renault has discovered itself able of weak point. Although the Renault model is a powerful vendor in its house market of France, it’s not particularly in style elsewhere in Europe. Plus, Renault’s secondary/emerging-market model Dacia is stumbling now that carmaker has yanked the marque out of Russia, as soon as it’s strongest market. Renault’s solely two different operations—sports-car maker Alpine, and a producing undertaking in South Korea—don’t contribute a lot to the company backside line. And whereas Stellantis has seen its inventory worth climb 75 p.c up to now 5 years, Renault inventory worth has remained stubbornly flat over the identical time interval.

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Dacia Sandero
The Dacia Sandero is among the many least-expensive autos within the Renault product portfolio.

Renault was additional weakened final yr when alliance companion Nissan lastly balanced the books on a quite lopsided co-ownership association. When the 2 firms entered right into a relationship method again in 1999, Renault was in a position to take a considerably bigger stake in Nissan than that firm was in a position to absorb Renault. This as a result of Nissan was struggling on the time, and its inventory was buying and selling at a deep {discount}. After years of acrimony associated to the possession imbalance, the 2 firms have lastly cleared the books, and every now owns roughly 20 p.c of the opposite. Whereas this new association helps to keep up a wholesome relationship between the 2 carmakers, it additionally implies that Renault will see much less income within the type of Nissan revenue transferring ahead.

This may make Renault a straightforward goal for a takeover, however the rumor whirling round is for a merger, which can appear odd.

Right here’s the deal: The French authorities holds important possession stakes in each Stellantis (6 p.c) and Renault (15 p.c), and appears to be in search of methods to streamline and make extra environment friendly the operations of the 2 firms.

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And whereas it might appear odd that the French authorities owns important stakes in publicly held companies—a factor which doesn’t occur a lot right here within the U.S.—keep in mind that the State of Decrease Saxony (mainly Bavaria) claims a big 11-percent state within the Volkswagen Group.

However whereas French bureaucrats may see the knowledge of a Stellantis/Renault merger, the deal doesn’t truly provide a lot for the previous. Already laden with 14 manufacturers, Stellantis isn’t in search of new market segments to overcome, and Renault doesn’t provide a lot in the way in which of geographic presence.

Keep in mind that Stellantis was fashioned by the merger of Fiat Chrysler with France’s Groupe PSA. And, keep in mind, too, that Peugeot, a PSA model, already has a powerful presence in France. So, until Stellantis is critically concerned about discount-brand Dacia, there’s little within the Renault portfolio for Stellantis to take advantage of.

Now, if Renault had a significant presence in China–which it doesn’t—a deal might make some sense to Stellantis, because the latter has struggled in that market.

We don’t see a lot worth in a Stellantis/Renault merger, or take over, or partnership, however the rumor remains to be enjoyable to ponder. However we’ve got to ask: Wouldn’t a consolidation of the 2 firms, each of which keep massive presences in France, final imply fewer jobs, and finally much less enterprise, within the nation?

At this level, we’re going to name any rumors associated to this merger simply the careless ramblings of some French bureaucrats throughout a morning break over espresso and croissant. Actually, an thought value considering, however finally not an excellent one.

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