Fiat Chrysler Automobiles (FCA) announced Wednesday the withdrawal of its proposed merger with the French car manufacturer Renault, an agreement that would have transformed the global automotive sector and would have helped automakers in their competition in the race for electric and autonomous vehicles.
“The political conditions are currently not met in France to carry out such a rapprochement,” said the Italian-American car manufacturer, in a statement, ensuring that he remained “firmly convinced” of the interest of this project.
Earlier in the day, Renault said the French government had asked its board of directors to postpone the vote on the merger. France, which owns 15% of Renault’s capital, had previously indicated that it would support a merger if companies protected French car jobs and factories.
According to the Wall Street Journal, the French government would have hesitated before the transaction because it lacked the support of Nissan Motors.
The French state, Renault’s largest shareholder, announced Wednesday evening at a meeting of the marathon board that he had for essential condition to the approval of the merger of 40 billion dollars that the transaction is part of the part of Renault’s alliance with Nissan, the newspaper adds, citing sources familiar with the matter.
Nissan’s two representatives on Renault’s board of directors plan to abstain from the vote, the daily’s sources said, pointing to doubts about Nissan’s desire to preserve the alliance if the merger were to take place.
“The French state has been extremely intrusive,” the newspaper adds, citing a source close to Fiat Chrysler. “They looked for the last word on every problem and it created a situation of uncertainty that eventually became intolerable,” the daily adds.
The merger proposal of the Italian-American car manufacturer aimed to create an economy of scale to cope with the slowdown in sales and the growing cost of developing electric vehicles and autonomous cars.
The merged company, if completed, would generate nearly 9 million passenger cars and light trucks per year, putting it just behind Volkswagen and Toyota.