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How Renault, Fiat-Chrysler could save by sharing

(Reuters) – French carmaker Renault to green-light a proposed merger with Fiat-Chrysler-Cars, the companies could almost immediately be saving money by consolidating components and the basic structures on many of their most popular vehicles, an industry analyst said on Tuesday.

FILE PHOTO: A Fiat-Chrysler automobiles (FCA) sign is seen on the AMERICAN headquarters in Auburn Hills, Michigan, USA May 25, 2018. REUTERS/Rebecca Cook/File Photo

The synergies may multiply if they invite Japanese automaker Nissan Motor Co, currently Renault’s alliance partner, participate in the merger, according to a former Renault and Nissan executive.

Renault and the Italian-Us rival Fiat-Chrysler-Cars are in conversation to address the costs of far-reaching technological and regulatory changes by creating the world’s largest car manufacturer.

A Renault-Fiat-Chrysler combination would mean a larger exchange of parts (that) can really boost the profitability of Fiat-Chrysler’s smaller vehicles,” said Sam Fiorani, vice president of AutoForecast Solutions.

Building similar models on a common vehicle architecture, Fiorani said: “would give both companies much more freedom in the production. They could mix of brands and car sizes on the same assembly line, switch vehicles between plants to balance the production, and even shifting production from one country to another, depending on changes in demand, rates or other considerations.”

Fiorani said Fiat-Chrysler could benefit from the sharing of the French automaker’s expertise in electric vehicles and motors, Renault and Nissan have together an amount of more than $5 billion. These are the areas in which Fiat-Chrysler has little in the way of parts, or the intellectual property.

Another sector that is ripe for consolidation is for light commercial vehicles, Renault and Fiat-Chrysler could build a variety of vans in different sizes on a common platform that can be assembled and sold on the international markets.

Ford Motor Co and Volkswagen AG started with their nato discussion of a year ago by focusing on potential cooperation in light commercial vehicles.

GETTING NISSAN’S BLESSING

Fiorani said Renault CMF architecture, which was jointly developed with Nissan and underlies many of the Renault-passenger cars and crossovers, can be used by the Fiat-Chrysler on a wide range of vehicles. As an example, he said that the CMF for a new foundation for at least five Jeep models, including the Renegade, Compass and Cherokee, which are now based on four different platforms.

An obstacle for the implementation of the merger, all of the intellectual property – including the CMF vehicle architecture – which is shared between Renault and Nissan, said Patrick Pelata, a veteran of the two automakers’ alliance, which used to be Renault’s chief operating officer.

“They have Nissan agreement to be used by the Fiat-Chrysler,” Pelata told BFM radio on Tuesday. “Nobody talks about that now, but it is an important subject.”

Renault would probably not be interested in the share of Fiat-Chrysler’s body-on-frame platforms that are the basis for the automaker of the big pickups and Suvs in North America, Fiorani said.

“But if Nissan is invited to join the merger, which may open the way for new opportunities,” he said. “Nissan could use Fiat-Chrysler’s full-size truck platform for the next generation, the Titan and the Armada, while Fiat-Chrysler could use Nissan’s mid-size platform truck for the next generation Dakota and Durango.”

Fiorani said that it would probably take at least two years after a Renault-Fiat-Chrysler merger is approved for the arrival of the first new vehicles built on shared architectures.

Reporting by Paul Lienert in Detroit; Additional reporting by Laurence Frost in Paris; Editing by Matthew Lewis

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