
How Fiat Chrysler’s Proposed Merger With Renault Crashed - blegh
https://www.wsj.com/articles/how-fiat-chryslers-proposed-merger-with-renault-crashed-11559860056
======
nimbius
Disclosure: im an automotive mechanic for a chain of midwest shops. Chrysler
has been the "frat boy on probation" for nearly 40 years now. Renault was wise
to reconsider what they would get.

wind back the clock to Daimler Chrysler and youll see there was nothing but
mistrust from the start. German execs wanted an inroad into an american market
segment that their luxury brands couldnt target at the time, and Chrysler
wanted cash and technology. In the end, Daimler wound up with almost nothing
in terms of IP or licensing, and Chrysler got the E class for its charger and
challenger. Right down to the windows that roll down when you exit and enter
by a few centimeters.

Fiat was at least pragmatic about its interaction and kept Chrysler at arms
length. they got the GM fiat small platform developed almost entirely for them
as they pumped cash into chrysler. The bitter irony here is that Chrysler once
partnered with Maserati to get them off the ground, and now the same group is
basically taking them to the cleaners. the promasters made it to the states as
basically rebadged Ducatos basically at cost. Chrysler saw very limited
revenue from it.

Chryslers other big problem is they are market-blind. Their strong suits are
already dominated by fiat. Americans want reliable cheap cars that are good on
gas, but things like the Charger RT and Hellcat challenger are loss-leaders
that arent doing much of anything but filling press releases and patching the
bald spots on the dwindling boomer market that remembers hellcat (and can
afford it.)

~~~
Shivetya
Fiat got Chrysler to get Ram and Jeep. Ram took off very well and recently had
landed many accolades for their trucks. Jeep turned around nicely but has seen
a slide for the last few quarters but has a solid foundation of vehicles to
include their first PHEV and pickup. Chrysler/Dodge are mostly sustained by
their minivans. Chrysler/Dodge was the first of the American brands to ditch
sedans. Ford and GM followed.

Challenger/Charger are FCA's pony cars kept to compete with Camaro and
Mustang. Combine the two FCA cars with their sibling the 300 and that was
nearly two hundred thousand sales, not bad for an old platform. What keeps
them going, they don't get stuck with the same boring colors year to year and
get other tweaks people want from them. However they are one of the biggest
risk factors for FCA too as they are vulnerable to fuel prices.

Renault simply is not a good fit because getting Renault means taking France
too and that would pretty much sink them in legacy costs and employment
structures. The better opportunity is to look to both China but locally to
move East into the long gone Warsaw pact states.

FCA's real loss was the passing of Marchionne before he could do an orderly
and planned handing off control to a picked successor.

~~~
petre
These models won't sell well in former Warsaw Pact states. Most of them are in
the EU now and fuel is quite expensive. People in those states buy mainly used
German cars, mainly diesels, plus cheap domestic cars (Dacia and Skoda) and
French cars (Renault and PSA brands). They'd probably sell in North Africa and
maybe the Arabic peninsula but that's debatable. The Emiratis are so well off
that their police drives Lamborghinis, so I pretty much doubt they'll buy
Dodge Chargers. China will just copy whatever model and produce a lookalike at
1/3 the price. They did it with the Range Rover Evoque and other cars.

~~~
gsnedders
> cheap domestic cars (Dacia and Skoda)

(Owned by Renault and VW Group respectively, for those unfamiliar with those
marquees.)

~~~
petre
And built domestically or in Casablanca, Morocco. Skodas built in India,
Russia or China are for those particular markets.

------
nxoxn
The merger may have helped the companies technologically but from my naive
perspective it seems like what each of the companies need more than anything
is a stronger QA department. From what I hear about Renault they are a little
shoddy and I know from personal experience the level of quality from
Jeep/dodge/ram/Chrysler.

Also, typically most companies only want to buy Jeep when looking at FCA
because it’s the real money maker from what I hear. I wonder if a merger would
ultimately lead to companies like Chrysler being shuttered due to redundancy.
That’d be a big loss of jobs.

And on another side note it’s intriguing to think about a company that would
have spanned four countries and how so many different personalities and
cultures would have been able to work together.

~~~
tyingq
_" Typically most companies only want Jeep when looking at FCA because it’s
the real money maker from what I hear"_

The Ram trucks are 3rd behind Ford and Chevy in sales, but only very slightly
behind Chevy. And way ahead of number 4, Toyota trucks. I imagine that's
attractive also.

~~~
kgwgk
Jeep (34% in 2018) and Ram (16%) account now for more than half of the sales
of the group. In units, because in dollars it will be more and in earnings
probably much more (but I don’t think the company discloses that info).

------
neonate
[http://archive.is/mZuEc](http://archive.is/mZuEc)

~~~
slimypi
Gooood bless you sir!

------
bluedino
Dodge has the oldest lineup there is:

[https://jalopnik.com/the-entire-dodge-car-lineup-is-old-
as-h...](https://jalopnik.com/the-entire-dodge-car-lineup-is-old-as-
hell-1823834029)

------
tyingq
Are the current Renault vehicles competitive? From the US, so I don't have
much insight into the brand outside of Nissan.

~~~
petre
Yes, they are cheap. Not particulary reliable but okay, kind of like most
French cars. They'll get you from point A to point B. They've got EVs. If you
want a better trim you buy Nissan, which is more and more like an overpriced
Renault. Not what they used to be. I remember the old Patrol GRs, built like a
tank.

~~~
GordonS
My personal experience of French cars is that they're cheap, but you get what
you pay for. I recall a Renault Clio I had several years ago, bought new,
where almost immediately after the 3 year warranty expired the problems stated
- a door handle literally came off in my hand, the gear knob came off in my
hand, and _numerous_ electrical problems occurred.

I made the mistake of buying French cars for years after that (because they
were cheap, and I guess I kind of am too!), but eventually learned my lesson.

~~~
Intimatik
I salute to you, had the same impression on French cars.

------
nobrains
Renaults are the only cars sold in the middle east whose entire range have
steering mounted speed limiters. I love that feature.

~~~
sl1ck731
When you say speed limiter are you referring to cruise control? Or an actual
speed limiter that won't let you go over X kph with your foot on the pedal?

If the latter, it seems like a strange feature to have/want.

~~~
chrisseaton
> If the latter, it seems like a strange feature to have/want.

Seems dangerous - to not be able to accelerate out of a collision in an
emergency if that is the safest thing to do.

~~~
benj111
I'm dubious that accelerating out of danger is the 'best' option in any but
the most contrived of circumstances.

~~~
chrisseaton
I said 'safest' \- I don't know who you're quoting with 'best'.

But if your options are hard breaking or hard accelerating, it's easy to see
when hard acceleration is better - when someone is immediately behind you and
the road ahead is clear, and then for example someone swerving into your lane
from the side

~~~
benj111
"when someone is immediately behind you and the road ahead is clear, and then
for example someone swerving into your lane from the side"

If someone swerves into your lane you accelerate... into them? Unless its a
really wide road (12 lanes?) where you have plenty of time to see that person,
and somehow know they're going to pull into your lane, but you can't pull into
another lane because Theres too much traffic. As I said, contrived examples.

(wasn't quoting you btw, just put best in inverted commas, as there's a lot of
different interpretations for best)

~~~
chrisseaton
> If someone swerves into your lane you accelerate... into them?

Obviously not. Accelerate out of their way.

~~~
benj111
"Obviously not"

Well I didn't think so either, I still don't see how it would work though, if
they swerve into your lane ahead of you, you should brake, if they were behind
you, you probably wouldn't see them, so there's a very narrow range where you
can both see them and plausibly argue that accelerating is a reasonable
option, and even then it seems to me at the very least, braking would be no
worse.

------
Theodores
Although Renault have joint ventures and plenty of operations around the globe
they are part owned by the French government and that government are keen to
hold on to their auto sector. Their sector is different to what the German
marques chase on the international stage, however, French cars are very
popular in France. Whatever government is in Paris they are obligated to
defend the French auto sector, they would be very unpopular if they did not.

Meanwhile, what does FIAT make in Italy these days?

FIAT get cars made in the former Eastern Europe, slap an Italian flag on and
pass off the product as having Italian design. That is what motorists buy
into, the Italian style and not the Italian workmanship. They don't care if
the tin box is made in Timbuktu, so long as it expresses their personality in
some way then they will buy it.

Italy has gone the way of the British auto sector, they have lost the ability
to have Italian companies making mass market cars in actual Italy. Sure there
are few thousand Ferraris and other lifestyle accessories churned out but
those FIAT 500 cars for the ladies are not made in Italy. Those days are over.

Aside from the poor communication between Renault and Nissan, the proposed
deal strikes me as over pushed by the FCA management. It went down with the
French establishment as well as the post-Brexit British idea of outsourcing
the NHS to American private healthcare providers. A complete non-starter
because the management was not a cultural fit. Having Renault thrown in with
some brash American led FCA was not on the table. The publicity for the merger
was over-eager, as if that would make it happen by making it appear the deal
was as good as done.

It is important to understand how the 'captains of industry' work. They are
capitalists, not Marxist social workers. They don't care about making jobs or
even delivering a product for the regular working/middle class person. They
are not cast from the same stuff as Henry Ford. They get their bonuses for
merger and acquisition activity and move on to the next deal.

~~~
Camillo
> Meanwhile, what does FIAT make in Italy these days?

Quite a bit, it turns out:

[https://en.wikipedia.org/wiki/List_of_Fiat_Group_assembly_si...](https://en.wikipedia.org/wiki/List_of_Fiat_Group_assembly_sites)

~~~
Theodores
The Panda and the 500x. Those are the two models FIAT make in Italy with the
FIAT badge on them.

The wider group makes Maserati and you don't see many of them in your
supermarket car park.

The 500x is not to be confused with the multitude of other 500 models. As in
the ones you actually see.

As for the Panda:

"The decision to manufacture the car in Italy, instead of manufacturing it
with the cheaper workforce in Tychy, Poland, was taken because of the
agreement between Italian Prime Minister Mario Monti and Fiat directors not to
close down any of Fiat's plants in Italy."

Almost forgot about the Ducato van.

This gets more interesting as it is a joint venture with PSA. There are
Peugeot and Citroen versions so exactly how a merger would work out with
Renault could be interesting. Renault partner with Mercedes in the category.

So a few thousand Maserati things, the vans and a few cars kept being made in
Italy so as to keep the government happy. It's a lot but not a lot.

Anyway, it is just final assembly we are talking about. Where do the
components come from? The final bit of putting the jigsaw puzzle is what we
all think a car factory is but there is always 10x the jobs in the component
suppliers. Get rid of the factory though and the local demand for the
components is gone. I suspect all the components business for FIAT has moved
over to Poland and elsewhere for the same reasons - people don't have
rentseekers demanding vast sums out of them every month in these 'lower wage'
economies.

~~~
Camillo
The Panda is the top-selling car in Italy by a huge margin.

[http://listino.motori24.ilsole24ore.com/auto-
prezzi/classifi...](http://listino.motori24.ilsole24ore.com/auto-
prezzi/classifiche/le-auto-piu-vendute-in-italia/)

And the 500X is the best-selling version of the 500.

