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Fiat Chrysler will convert its Mack Avenue engine factory into an assembly plant. The plant will build the next-generation Jeep Grand Cherokee and a new large Jeep SUV.
Tanya Wildt, Detroit Free Press

Fiat Chrysler Automobiles and French automaker Renault are in talks to form a global partnership, and details could arrive as early as Monday, a source said on Sunday.

Reports that the two automakers had been in discussions about a possible linkage began in earnest on Saturday, and a source told Free Press that the talks had "accelerated" and gained strength throughout Sunday.

Neither FCA nor Renault have commented publicly.

Several media outlets also indicated that an agreement would pave the way for FCA to join Renault's alliance with Nissan and Mitsubishi at a later date.

A connection of that scale would remake the global automotive industry.

Any agreement between FCA and Renault would not affect US operations or expansion plans, a source said. FCA is headquartered in the USA. UU In Auburn Hills and is planning a massive expansion of its manufacturing operations on the east side of Detroit.

Persistent fusion talk

The news of an agreement, if it were to happen, would seem to answer the perennial questions about possible candidates for the FCA merger. In recent years, the company in general has addressed its decision to focus, in the United States, on the production of SUVs and trucks compared to traditional automobiles.

Renault would offer the company the opportunity to strengthen its electric vehicle credentials at a time when that is becoming increasingly important, especially in Europe.

Michelle Krebs, executive analyst at Autotrader at Cox Automotive, noted FCA's strong interest in the benefits of consolidation.

"This is something that Sergio Marchionne talked about for a long time, that the industry needs to consolidate, that he is wasting a huge amount of money" on every company that pursues the development of technology, said Krebs, referring to the late FCA CEO.

Krebs noted that both companies have different footprints, and Renault no longer has a presence in the United States, where FCA gets most of its profits from the Jeep and Ram truck brands.

She also offered words of caution.

"Both automakers have to walk very carefully, both have experienced a combination of operations that has not worked very well," Krebs said. "While things can look good on paper, (with) complementary operations and footprints … it's often about uniting cultures, and that's a challenging task that is not always successful and both companies have experienced it."

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Krebs pointed to the not-so-equal "merger of equals" of Chrysler with Daimler-Benz, which was actually an acquisition by the German company, and Renault's current relationship with Nissan and Mitsubishi, which has been under stress after the expulsion and criminal charges. Japan against its former boss, Carlos Ghosn, who has denied the irregularities.

House of cards?

Jon Gabrielsen, a market analyst and car consultant, was more direct, and said he sees nothing positive in that deal.

"It sounds like the perfect recipe for a house of cards that will inevitably collapse over time. Take the stressed relationship between Renault and Nissan, which is said to have been held together only by the absolute determination and charisma of Carlos (Ghosn). Remove the glue from Carlos (Ghosn), add Mitsubishi then add Fiat Chrysler, "said Gabrielsen." According to my account, it is a collage of colossi, with five different cultures of the company (Renault, Nissan, Mitsubishi, Fiat and original Chrysler) with four different main national cultures (very different, French, Japanese, Italian and American) overlap to an inevitable global recession. Meanwhile, I do not see any benefit at least for the Chrysler part of the agreement. "

Gabrielsen pointed out that "if you can not get the total cultural organization to dance in perfect harmony, it is irrelevant how brilliant a combination on paper looks to obtain combined financial information or combined market share and coverage." The beast will be destroyed from within " .

However, Sam Fiorani, vice president of global vehicle forecasting for AutoForecast Solutions, offered a different perspective when the possibility of an alliance with Renault-Nissan (or France's PSA group) was raised in April.

"South America is the only obvious coincidence between FCA and any of the potential partners, but in other places … they would form a powerful team." Renault and Peugeot-Citroen-Opel control Europe much more completely than Fiat / Lancia. -Nissan and La Fuerza exceeds that of Groupe PSA, but either of the two candidates would be an (and) excellent partner for FCA, "Fiorani told Free Press. "FCA has only a few strengths and many weak areas." Worldwide, Jeep is the obvious highlight of the FCA family, Ram and minivans are strong in North America, while Fiat maintains South America and Italy.

Contact Eric D. Lawrence: elawrence@freepress.com. Follow him on Twitter: @_ericdlawrence.

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