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Fiat Chrysler and Renault merger: a doomed deal?

“Disquiet” over a proposed €33bn merger with Fiat Chrysler (FCA) has caused the Renault board to postpone a key vote on starting talks.

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"Disquiet" over a proposed €33bn merger with Fiat Chrysler (FCA) has caused the Renault board to postpone a key vote on starting talks, says Adam Sage in The Times. Nissan, which currently has an alliance with Renault, and owns 15% of the French carmaker, has displayed "a conspicuous lack of enthusiasm" for the tie-up.

If both sides want to remain competitive, they have "little choice" but to go ahead with the deal, says John Gapper in the Financial Times. Owing to the "escalating costs of software and hardware", which can reach $2bn to develop for each new car platform (a shared set of design, engineering and production efforts and major components), the key to staying profitable is to join forces. Moreover, the global industry plans to invest $61bn in autonomous vehicles on top of $255bn in electric vehicles by 2023, and here again there is strength in numbers. The car industry may still be "nationally divided", but car companies are realising that "the cost of independence is prohibitive".

It won't work, says Jeremy Warner in the Daily Telegraph. Electrification and self-driving cars pose a "monumental challenge" . But "however much the car firms merge and cut their costs, it's very unlikely to be them that makes the weather in the brave new world of electrification". Besides, the "challenges of marrying very different cultures, ways of operating and legal frameworks" will negate "any supposed synergies and cost benefits". The current turbulence between Renault and Nissan, as well as Chrysler's 1990s merger with Daimler-Benz, which "descended into acrimony ", presage failure this time, too.

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