Renault and FCA remain open to merger, but Nissan and French gov’t issues will need to be addressed

The conflagration that developed from the failed merger proposal between Fiat Chrysler Automobiles (FCA) and Renault may not have reduced everything to a cinder, it seems. The main protagonists still believe that a deal can be struck, although it will certainly need more delicacy to get it going the second time around.

Renault chairman Jean-Dominique Senard is one of the believers. “The project remains, in my head, absolutely remarkable and exceptional,” he told shareholders last week. The folk at FCA also remain open to the idea, stating it was “firmly convinced of the compelling, transformational rationale’’ of its proposal, as Bloomberg reports.

That the door remains ajar was fanned by a report that said an attempt to resurrect talks had taken place. Italian publication Il Sole 24 Ore reported that FCA CEO Mike Manley met with Renault executives late last week in order to kick off fresh discussions.

Nonetheless, two pertinent issues will need to be addressed before any revival in discussions can give the deal any real headway. The first of which is for Renault to repair the strained relationship with Nissan, and the other is to look into the possibility of the French government easing its grip on the French automaker. The state has a 15% stake in the French automaker.

Renault has said that patching things with Nissan (in which is has a 43.4% stake) is its priority, and it has been quite a fallout. It was reported that Nissan refused to study Senard’s proposed full merger, and the Japanese automaker also abstained from endorsing the FCA-Renault merger plan, which led to the French government blocking a vote and asking for more time to win Nissan’s backing. Eventually, FCA – citing “political conditions” in France – pulled the plug on the deal.

While overtures to mend are supposedly underway, there still looks to be a fair bit of tussling going on. Renault has signaled that it will block Nissan from adopting an overhauled governance structure at an upcoming shareholder meeting unless it received seats on new Nissan committees. According to Reuters, the Japanese automaker is mulling over giving Renault some seats on planned oversight committees, but a decision has not been reached on the matter.

Changing the French government’s stance might be an easier task to manage. Finance minister Bruno Le Maire has stated that France was ready to reduce its 15% stake in Renault to win Nissan’s backing. “We can reduce the state’s stake in Renault’s capital. This is not a problem as long as, at the end of the process, we have a more solid auto sector and a more solid alliance between the two great car manufacturers Nissan and Renault,” he said last week.

Will the union survive the ride through this rocky road and emerge happier? As it goes, this one is shaping up to be a good soap opera, one that looks set to run and run, with plenty of twists along the way.

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