To get biggest bang from merger, Nissan must be part of the deal – Automotive News


If Nissan isn’t a major party in the combined FCA-Renault, it will be a massive missed opportunity, especially in pivotal North America.

Don’t get me wrong, it’s a fine deal for what it is: a consolidation of European small-car companies to reduce development costs and manufacturing overhead. And if it gets U.S. dealers a strong captive lender, then all the better.

But that doesn’t seem like enough, given all that could be achieved.

Mathematically, Fiat Chrysler Automobiles chief Mike Manley and CFO Richard Palmer are correct that the combined company would be the world’s third-largest, surpassing a General Motors that shrewdly exited Europe.

But an FCA-Renault merger doesn’t shift the balance of power in the industry and it seems unlikely to spur a global wave of consolidation. Is FCA-Renault going to scare VW into a deeper deal with Ford? If PSA marries up with JLR, as has been suggested, will anyone care?

But if Nissan were a partner — and the three parties could truly integrate — the potential is mind-blowing. That would constitute global scale to rival anything VW or Toyota can do.

It’s a fascinating turn: Many observers predicted that FCA Chairman John Elkann would sell the company to get out of mass-market automaking with its huge capital needs, demanding governments and razor-thin margins. Instead he is trying to form an even bigger player to improve the odds through scale in Europe.

But if he and Jean-Dominique Senard of Renault can persuade Nissan CEO Hiroto Saikawa and the rest of post-Carlos Ghosn Nissan to be an equal (or equal-ish) partner, the potential in North America, still the world’s most lucrative market, is terrific.

FCA, like Chrysler before it, is heavy on light trucks: Jeeps, Rams and minivans have long been the driver of the business. FCA — traditionally the weakest of the Detroit 3, facing existential crises roughly once a decade — had to give up the ghost of competing in family sedans, and it never invested much in money-losing alternative powertrain or autonomous technology.

Guess what Nissan has? Billions of dollars worth of accumulated knowledge in electric vehicles and self-driving systems. It also makes competent sedans and small crossovers, where Jeep and Dodge have struggled. And it even has a useful premium brand: Infiniti hasn’t blossomed like Toyota’s Lexus, but it has a legitimate place in the profitable mass-luxury market.

Separately, Nissan and FCA (with or without Renault) have significant product and geographic weaknesses. Together, they can span the market with credible offerings from EVs to luxury vehicles to big trucks.

It’s possible that many benefits can still be achieved through the evolving alliance. Chrysler was once going to make Titans for Nissan, and that could happen, with or without cross-shareholding. Perhaps FCA can meet its ZEV and other regulatory requirements by working with Nissan, instead of relying on Tesla.

But these kinds of moves happen faster when everyone works for the same CEO, chairman and shareholders. For all the benefits of the alliance structure that Ghosn built, it remained a loose association of separate companies, an often-unwieldy organization that had trouble committing to projects. A post-Ghosn Renault is now proposing something new to FCA — and Nissan ought to be in the center of it.

You may email Jamie Butters at [email protected]

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