This is Autoline Daily reporting on the global automotive industry.
FCA PROPOSES MERGER WITH RENAULT…
Fiat Chrysler Automobiles stunned the industry yesterday by proposing a 50-50 merger with Renault. FCA says it would create the third largest car company in the world behind Volkswagen and Toyota. The combination would produce 8.7 million vehicles a year and save over $5 billion a year through efficiencies in purchasing, R&D and manufacturing.
BUT IT WOULD BE LOPSIDED…
Here’s our Autoline Insight. Renault will jump at the deal, because FCA is giving so much away. FCA sells more cars than Renault, it makes twice as much EBIT profit and it has a 25% larger market cap. Yet it’s proposing to be an equal partner in the merger. To mollify FCA shareholders they’ll get a one-time payout of $2.5 billion. But it almost sounds like FCA is desperate to do a deal. Worse yet, this will throw FCA in the middle of the Renault-Nissan so-called Alliance which is a mess.
AND WITH LITTLE SYNERGIES
Merrill Lynch says the deal sounds questionable because it provides no synergies in the American market which is where FCA makes almost all of its profits. It says there would be next to no synergies in Europe because FCA says that no plants would close. It does nothing to boost their presence in China and Asia. And there could be a big backlash from President Trump, as well as from the American consumers that buy big Ram pickups and Jeeps who would no longer see these as American brands. The Renault board of directors reportedly will vote on the deal next week.
BMW REVEALS NEW, FWD 1 SERIES
BMW showed off the all-new 1 Series and while the styling is very similar, it’s now made on a front-wheel-drive-based architecture, which is shorter than the outgoing model. But the front-drive layout frees up more space for passengers and cargo. All-wheel drive is also an option with its range of gasoline and diesel engines. Power ranges from 116- to 306-horsepower, which is fed through either a 6-speed manual or a 7- or 8-speed automatic transmission. Customers will now be able to use their smartphone as a key, which can be shared with up to 5 people, and they can perform functions and get information through voice and gesture control.
BMW iNEXT TO HAVE CURVED DISPLAY
Speaking of BMW, it revealed that the iNEXT will have a huge, curved, single-piece display screen. The automaker calls the iNEXT its technology flagship and it’s scheduled to go into production in 2021.
HYUNDAI AIMS TO OPTIMIZE RANGE OF COMMERCIAL EVs
To help optimize the range of electric light-duty commercial trucks, Hyundai developed a system that is able to estimate the gross vehicle weight of the vehicle while its driving. Using acceleration sensors, gross weight is estimated through Newton’s law of acceleration. When pushing an object at a constant speed, the weight of the object can be calculated depending on its acceleration rate. Through this process, the vehicle estimates the distance it can drive and adjusts its maximum torque output. So for example, when the vehicle is carrying a heavy load, it automatically informs the driver of the estimated drive range so there’s enough battery life to reach the destination. Hyundai says its considering using the technology on its electric light-duty commercial vehicles in the future.
WEEKEND RACE RESULTS
In racing news, Simon Pagenaud won the Indy 500 in his Penske Chevrolet. The last 14 laps were a real thrill that saw Pagenaud trade the lead with Alexander Rossi 5 times and only edged out Rossi’s Honda by two-tenths of a second at the end. Mercedes maintained its dominance in Formula 1 this season by finishing first and third at the Monaco Grand Prix. Race winner Lewis Hamilton extended his point lead to 17. And Martin Truex Jr. won a caution-filled race at Charlotte Motor Speedway in his Toyota.
WHY FORD WENT WITH FLAT PLANE CRANK IN GT350
On Autoline After Hours last week, we were joined by Carl Widmann, from Ford’s Performance Division. He brought a new Mustang GT350 to the studio with him and he explained why the engineering team decided to give it a flat plane crank engine.
(Clip from AAH #465 can only be viewed in the video version of today’s show.)
You can watch that entire show right now on our website, Autoline.tv or you can find it on our YouTube channel.
But that’s it for today, thanks for watching and please join us again tomorrow.
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Comments (27)
May 28th, 2019 at 12:02 pm
Renault/FCA
YI
KES
May 28th, 2019 at 12:09 pm
The news of the FCA “sell out” with very little in return needs a lot of journalistic “deep diving”. There is too much missing from this proposed link up.
May 28th, 2019 at 12:09 pm
Would Nissan be part of that FCA/Renault deal, or is the whole Renault/Nissan thing in a completely unknown status?
May 28th, 2019 at 12:13 pm
Renault/FCA bigger isn’t always better. Everyone knows the “F” in FCA is Fiat so I don’t really think anyone would think its less of an American company than they already do. I think most realized it didnt have much affect from as far back when it was Daimler Chrysler.
So German, Italian, French whats the difference?
May 28th, 2019 at 12:16 pm
Couldn’t Hyundai use that same program to determine the loss in MPG of its gas or diesel powered vehicles?
May 28th, 2019 at 12:17 pm
I agree. Lots more to know about this before saying if it is dumb or not so dumb. But worrying that Jeep and Ram buyers will shun the brands because they will be foreign-owned? Really? Fiat owns them already. And Renault owned Jeep once before. That should be the least of their concerns with this deal. (Might be worse of the Chinese owned them.) Trump will have his say no matter what, so who knows and who cares on that front.
May 28th, 2019 at 12:17 pm
Would think that Peugeot would be a better fit.
They are apparently adept at generating benefits from T/Os (see Opel), it would avoid the messiness of the Nissan debacle and partial French G,vmt ownership, and they are obviously keen to re-enter U.S.
May 28th, 2019 at 12:28 pm
fca renault merger is NOT about america, fca isnt about america, its about italy john elkann agnelli family heirs. fca has always been the italian job. the americans just fund it.
May 28th, 2019 at 12:44 pm
Jeep and Renault were connected once before, from the late ’70s to 1987.
May 28th, 2019 at 12:47 pm
FCA and Renault (with Nissan) too; perhaps this/these alliances with morph into a debacle. Too soon to tell without details, but I suspect we will hear a lot more about this before we can make accurate predictions.
I saw the end of the Indy 500 and heard the announcer say that this was the first time since 1920 a Frenchman has won the “500″ so I had to look it up (thinking I knew who was the last one), yep, Gaston Chevrolet (glad Pagenaud was driving a Chevy).
May 28th, 2019 at 12:54 pm
FCA proposes merger with Renault. Hmm…like my old pappy used to say, there’s a polecat in the hen house!
May 28th, 2019 at 12:57 pm
10. I looked it up too, and saw that there were multiple French winners before 1920, but none between 1920 and 2019. It seems that all of the Indy car drivers, as the F1 drivers speak English pretty well regardless of their native language.
May 28th, 2019 at 1:01 pm
Beware the merger of equals!! Fiat may not have been here before, but Chrysler sure has. I fear that, while plants may not close, the result of this merger will only focus more attention on the brands that are doing the most for FCA (Jeep, Ram [and Pacifica], Alfa Romeo and Maserati) and continue to not invest in their remaining, once great brands (Chrysler, Dodge and Fiat). With Ferrari now off on its own, it would be easy to supplement/badge engineer vehicle replacements for faltering brands and their name plates (if they keep them at all), while focusing on those that remain that bring the most revenue! I’m not saying this merger will be bad, and admit that, at times, change can be uncomfortable, yet companies are in the business to make money! And from the outside looking in, FCA has some jewels that certainly sparkle more then others do right now. There may come a time soon when Chrysler and Dodge may be joining their sister brands, Plymouth and Eagle, in the pages of the automotive history books! That would be a sad day.
May 28th, 2019 at 1:04 pm
I took two years of French in high school (but it took me three years to accomplish), so my hats off to all who are bilingual or more. English is the international language (I know for all air travel) and is usually the language of choice for a lot of the world’s mediation so perhaps we should count our lucky stars (for that), at least I do.
May 28th, 2019 at 1:32 pm
From Bloomberg: “Instead, the savings are expected to come from common purchasing, shared vehicle platforms and R&D. Factoring the lengthy timespan the synergies will take to achieve, plus integration costs, and that headline figure might be worth only about 3.5 billion euros of value creation to each side, by my rough calculations.”
So it sounds like many of us in the industry don’t see this merger as being all that
May 28th, 2019 at 1:45 pm
@ChuckGrenci & Kit Gerhart – I also saw the stuff about Chevrolet being the last Frenchman to win the 500. Gil de Ferran won it in 2003, but even though he was born in France, his nationality is listed as Brazilian, so I guess they don’t count him.
May 28th, 2019 at 2:02 pm
13 I took one semester of French in college, but don’t remember much. Yeah, if you know only one language, as with most Americans, English is the one to know. In addition to the specific things you mention, English is generally the language of international business. Also, English is used at world championship model airplane contests, no matter where the event is held, and even the though governing body is in France.
May 28th, 2019 at 3:18 pm
If Renault and FCA team up, I have a great name for them, American Motors! They can create a new model called the Alliance to celebrate!
May 28th, 2019 at 4:19 pm
FCA could easily ship in Renaults SUVs into the US or do assembly in the US. Renault also has some experience in EVs with their Zoe (and could leverage the Leaf which remains Nissans only EV) whereas Fiat has done a bad job. Both have good products in light commercial and Renault has some good large semi trucks which just might be offered in the US. In theory both car makers in Europe are in a bad state with both having too much capacity selling low profit cars and most only sell well in France/Italy. They have no premium cars to reuse anything they built well (like VW does with Audi). Both are nowhere in self-driving/autonomous and both are nowhere in hybrid (Renault will launch one for their Ford-Focus competitor- the lagune). Both could easily close all their Euro factories and build it all in the other factories. Neither has good reputations in reliability/in-car tech/powertrains/design/innovation. Its like Suzuki being bought by Subaru – why bother??
Maybe Nissan mgt knew this was coming and wanted to avoid FCA like the plague. Its not as if Renault has done much for Nissan…
May 28th, 2019 at 4:38 pm
fca renault merger,capitalism on this side of the pond will fund socialism on the other side of the pond. efficiency on this side of the pond will fund inefficiency on the other side of the pond.
May 28th, 2019 at 5:48 pm
Renault has some vans that you see in Europe, and not just in France. Ram Promaster Suburb?
May 28th, 2019 at 6:43 pm
FCA & Renault – in my view this is a long term survival move. FCA has been overly reliant on supplier tech, which doesn’t make them future proof. Third largest gives them better leverage for procurement, another reason to do it. Why Renault? Nobody else said yes.
May 28th, 2019 at 9:13 pm
22 It seems that FCA is also overly reliant on gas hogs that almost no one needs. For now, that is working, but at some point, it won’t. As far as Renault, they have some OK offerings in Europe, but whatever Americans think of VW, VW makes the best “mainstream” cars in the European market, and that is unlikely to change any time soon. Renault needs to come up with cars that will sell well beyond France.
May 28th, 2019 at 11:27 pm
23. I always thought that even the French did not like “French cars!” The old Renault Dauphine (sp?) was so bad it even made the Chevy Vega look good. I have always been concerned about Renault bailing out a Japanese auto company – Nissan! Now hearing some of the misgivings about CVT transmissions – especially in some of the Nissans, they may really deserve each other. As for FCA, if they screw up Ram and Jeep, which is really all they have here in the states (Alfa and Maserati are no players here, and no one really cares!), they will have committed suicide.
May 29th, 2019 at 7:41 am
23 I was most recently in France about 10 years ago, and there were a lot of French cars. I rented one, a Citroen C4, with a diesel and manual transmission. The displays were a little quirky, but it drove decently. French brands now make up a little over half the sales in the country, at least as recently as 2017.
https://www.best-selling-cars.com/france/2017-q1-france-best-selling-car-manufacturers-brands-models/
May 31st, 2019 at 4:30 am
FCA (specifically, those at FCA that ‘are desperate’ to merge with that utter loser Renault, engulfed in this huge controversy with Nissan, all making junk low-quality vehicles, have lost their mind.
WHY is FCA “desperate” to ,merge with these losers? have they learned NOTHING from recent history? (GM – Fiat Debacle, Daimler-Chrysler even bigger debacle)?
May 31st, 2019 at 4:32 am
BMW offers FWD new 1 series?
Stupidity has no bounds. Now the 1 series will be a CIvic, only at twice the price.
Great Thinking, Fools at BMW. Way to destroy a historic brand, while at the same time Tesla has eaten your lunch already!