Falling sales in the three major regions -- China, the U.S. and Europe -- have brought fresh urgency to the cause of consolidation championed for years by the late former Fiat chief, Sergio Marchionne, and deposed Renault-Nissan alliance Chairman Carlos Ghosn.
Fiat has been seeking a partner in recent months, with talks focused on Renault and PSA. Fiat Chairman John Elkann and CEO Mike Manley have made several trips to Paris since the beginning of the year for business meetings as part of their search for ways to make the carmaker stronger, the people said.
Renault has been trying to firm up its two-decade alliance with Nissan, which was shaken by the arrest of Ghosn last November over alleged financial misdeeds. His departure surfaced tensions between the partners, with Nissan executives resisting new proposals by Renault to cement ties through the creation of a holding-company structure.
Renault owns 43 percent of Nissan -- the bigger partner -- which in turn owns 15 percent of Renault, with no voting rights. A 2015 agreement granted Nissan guarantees preventing Renault from interfering in its governance, a move the Japanese carmaker considered necessary because the French government is Renault’s most powerful shareholder.
The French government has been kept abreast of talks between Renault and FCA and will consider the impact of any proposed tie-up in terms of jobs, industrial footprint and valuation, according to a person familiar with the matter. French officials would prefer a deal that strengthens the existing Renault alliance by bringing in Fiat, and at worst a deal with the Italian-American carmaker would have to be alliance-neutral, the person said.
Relations between Nissan and Renault had steadied in recent weeks, with the appointment of Renault CEO Thierry Bollore to the board of its Japanese partner, and the reappointment of Nissan CEO Hiroto Saikawa, who opposes a merger with Renault. Still, a Renault deal with Fiat would put pressure on Nissan, while potentially making the resulting entity more formidable.
Together, Renault, Nissan and Mitsubishi sold 10.76 million passenger cars and light trucks last year. Joining Fiat with the French and Japanese partners would bring the total to more 15 million vehicles a year, with a strong presence in all major markets and premium brands like Jeep, Maserati, Alfa Romeo and Infiniti under a common umbrella.
Renault’s partnership with Nissan was thrust into the spotlight in November with the arrest of Ghosn, the chairman and architect of the three global car-making alliance with Mitsubishi.
FCA has been looking for a tie-up since Marchionne created the Italian-American carmaker in 2014. A year later, Marchionne became vocal on the auto industry’s need for consolidation in an analyst presentation called “Confessions of a Capital Junkie.”
Marchionne argued then that carmakers waste 2 billion euros a week by duplicating investments they could share. At the time, Renault-Nissan was considered the second-best fit for Fiat after General Motors, according to people familiar with the plan. GM rebuffed Fiat’s approaches.
Fiat also has history with French President Emmanuel Macron, which could help smooth the way for a deal given France’s 15 percent stake in Renault. In 2013 Macron, then a top adviser to President Francois Hollande, had preliminary talks with Fiat about a merger with troubled Peugeot.
Renault’s partnership with Nissan was thrust into the spotlight in November with the arrest of Ghosn, the chairman and architect of the alliance.
Bloomberg and Reuters contributed to this report