Typically, rumors are simply rumors.
There’s a enjoyable new rumor bouncing across the automotive-industry discuss 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 would finish with the 2 carmakers merging into one huge pleased auto firm, ideally sharing growth 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 thought of the 2 automotive corporations coming collectively isn’t solely loopy. Right here’s why:
Renault has discovered itself ready of weak spot. Although the Renault model is a robust vendor in its residence market of France, it’s not particularly common 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 challenge in South Korea—don’t contribute a lot to the company backside line. And whereas Stellantis has seen its inventory worth climb 75 % up to now 5 years, Renault inventory worth has remained stubbornly flat over the identical time interval.
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Renault was additional weakened final 12 months when alliance companion Nissan lastly balanced the books on a quite lopsided co-ownership association. When the 2 corporations entered right into a relationship means again in 1999, Renault was in a position to take a considerably bigger stake in Nissan than that firm was ready 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 corporations have lastly cleared the books, and every now owns roughly 20 % of the opposite. Whereas this new association helps to take care of a wholesome relationship between the 2 carmakers, it additionally signifies that Renault will see much less income within the type of Nissan revenue transferring ahead.
This could make Renault a simple 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 %) and Renault (15 %), and appears to be in search of methods to streamline and make extra environment friendly the operations of the 2 corporations.
And whereas it could appear odd that the French authorities owns important stakes in publicly held firms—a factor which doesn’t occur a lot right here within the U.S.—do not forget that the State of Decrease Saxony (mainly Bavaria) claims a major 11-percent state within the Volkswagen Group.
However whereas French bureaucrats may see the knowledge of a Stellantis/Renault merger, the deal doesn’t really 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.
Do not forget that Stellantis was shaped by the merger of Fiat Chrysler with France’s Groupe PSA. And, bear in mind, too, that Peugeot, a PSA model, already has a robust presence in France. So, until Stellantis is significantly fascinated with 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 may 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 now have to ask: Wouldn’t a consolidation of the 2 corporations, each of which preserve giant 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 concept price considering, however finally not an excellent one.
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