Renault board reportedly plans to go public with partnership after a meeting on Monday morning

This article is more than 1 year old

This article is more than 1 year old

Fiat Chrysler and Renault are expected to announce on Monday that they are in talks on a potential tie-up, in a move that could address some of the main weaknesses of both carmakers at a time of transformation for the sector.

The Renault board is planning to go public about the possible partnership after a meeting in the morning to discuss the deal, according to reports.

It comes after news broke over the weekend that two of the world’s leading auto companies were in talks on a comprehensive global partnership at a time when carmakers are under mounting pressure to consolidate to address the challenges posed by electric vehicles, driverless technology and tougher emissions regulations.

Fiat Chrysler Automobiles (FCA) has a highly profitable North American Ram trucks business and Jeep brand, but it has been losing money in Europe, where it may also struggle to keep pace with looming carbon dioxide emissions curbs.

Renault is an electric-car pioneer with relatively fuel-efficient engine technologies and a strong presence in emerging markets, but no US business.

FCA’s chair, John Elkann, a member of Italy’s Agnelli dynasty that controls the company, stressed the family’s commitment to the automotive industry earlier this year, and said the company was prepared to take “bold and creative decisions” to help build a solid future for the Italian-American company.

Any tie-up between the two companies would be likely to face political and workforce hurdles, particularly in Italy, although most of FCA’s European plants are running below 50% capacity.

A partnership could also potentially pave the way for FCA to join Renault’s alliance with the Japanese carmaker Nissan in the future. The Renault-Nissan partnership, underpinned by cross shareholdings, has been strained by the scandal surrounding its former chairman Carlos Ghosn, who was ousted after his arrest last year.

Speculation about the future of Fiat Chrysler, often seen as a potential target for a takeover or merger, intensified after the death last year of its long-serving former chief executive Sergio Marchionne.

According to reports earlier this year the manufacturer had also restarted talks with France’s PSA Group, which have been a recurring theme over the years.

Fiat Chrysler and Renault together would have a combined market value of almost €33bn and total global sales of 8.7m vehicles.

A tie-up that included Nissan would rank the carmaker as the world’s number one carmaker with 13.8m of annual sales. It would also maintain a foothold in China, where both FCA and Renault are marginal players.