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Merger with Renault has potential to make Fiat Chrysler a heavyweight

Mark Phelan, Detroit Free Press on

Published in Automotive News

DETROIT -- Fiat Chrysler may have picked the best possible partner and future-proofed itself by allying with Renault. Despite that, the deal leaves plenty of challenges and raises new questions.

A week ago, a hungry Chinese or Indian automaker seemed a likelier mate for FCA than Renault. The fear was a rapacious wannabe would make a too-rich-to-refuse bid for FCA, then strip its acquisition of brands and technology without regard for the company's U.S.-based manufacturing, engineering, design and employment.

The reality today is a 50/50 partnership, and Renault's history suggests it plays well with others, despite current strife in its alliance with Nissan and Mitsubishi.

The proposed merger, which Renault's board supports, would give FCA access to electric vehicles and other technologies the Italian-American automaker gave short shrift. It makes FCA a heavyweight, an integral part of a bigger automaker than GM or Ford, and potentially a cornerstone of the largest automaker the world has ever seen. It's an industry-changing deal that would delight FCA's late CEO Sergio Marchionne, who enjoyed few things more than flouting convention.

Members of the Agnelli family, who founded Fiat more than a century ago and had the vision to risk everything and dispatch Marchionne on a longshot attempt to save Chrysler when other automakers shied away in 2009, are expected to be the new company's largest stockholders.

The best laid plans ...

 

That first-glance reading of the deal sounds peachy, but remember: A partnership that looked just as good on paper became a nightmare and nearly destroyed Chrysler in less than a decade when ego and insecurity scuttled DaimlerChrysler, the auto industry's last "merger of equals."

There was fault on both sides when DaimlerChrysler cratered. There must be vision, courage and cooperation by all for Fiat Chrysler Renault to succeed. A catchier name would be fine, too.

What each brings to the party:

-- FCA delivers strong brands with premium pricing and growth potential -- Jeep, Ram, Maserati, Alfa Romeo -- and a small-car mess in Europe.

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