FRANKFURT/DETROIT - Fiat Chrysler Automobiles NV and Renault SA promise huge savings from a mega-merger, but such combinations face tall odds because of the industry’s long product cycles and problems translating deal blueprints into real world success, industry veterans told Reuters.
FCA and Renault have raised the stakes for themselves by ruling out plant closures. That increases the pressure to achieve more than $5 billion in promised annual savings from pooling procurement and research investments. “With the emergence of connected, autonomous, electric and shared vehicles, carmakers face immediate investments, so new opportunities for sharing costs have emerged,” said Elmar Kades, managing director at Alix Partners.
He is a former director of Volvo Cars Corp, a non-executive director of Geely Automobile Holdings, a former head of manufacturing at BMW and the former chief executive of Opel. Fiat Chrysler said it believes it will meet European fleet average emission thresholds, including by spending up to 1.8 billion euros to acquire regulatory credits from rivals.
The merger is about survival in a post-SUV, post $5 per gallon America. The cost-cutting promises are to placate Wall Street weirdos who can’t see past next quarter.
The quality of the merger depends on the operation of the quality of the borrowing and the currency of the leadership statements of the acquisition systems for the labor supply and the quality of the joining of the authorized forces
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