Renault shares buoyed by Stellantis merger rumour

RENAULT is reportedly considering a merger with the Stellantis group as the company seeks to counter increased competition from Chinese and German marques.

 

However, Stellantis chair John Elkann has told Automotive News Europe that the group has no merger plans with Renault, and that any such suggestion is pure speculation.

 

“There is no plan under consideration regarding merger operations with other manufacturers,” he said.

 

Mr Elkann said Stellantis remains committed to a plan “which brings together the Italian government with all the stakeholders in the automotive industry to achieve important common goals to address the challenges of the electric transition”.

 

However, Mr Elkann’s claim counters a report this week from Italian publication Il Messaggero which states that the French government – Renault’s largest shareholder and one that has a stake in Stellantis – is studying a merger plan between the two groups.

 

Il Messaggero reports that France is considering a merger between the two manufacturers to “strengthen its grip on the sector and counter Chinese and German competition”.

 

The merger discussions were fuelled by Stellantis CEO Carlos Tavares, who told Italian media that the ascendancy of Chinese manufacturers, the EU’s efforts to phase out internal combustion engines, and the United Auto Workers Union’s costly new contracts in the United States were among the factors driving a potential merger.

 

Mr Tavares said Stellantis is gearing up for an era of auto industry consolidation, predicting the rush to offer more affordable electric vehicles will result in a “bloodbath” and that he has paid particularly close attention to Renault, a company he perceives as vulnerable.

 

“It is my job to keep my eyes open. It is my job to understand how the industry is going to survive this transition. It is my job to make sure that my company will be one of the winners,” said Mr Tavares.

 

“If we are one of the winners, of course there will be opportunities.”

 

Mr Tavares said that car manufacturers are currently engaged in “a race to the bottom with electric vehicles”, cutting prices faster than they are reducing costs.

 

“In this world, which is totally Darwinian, the guys who are able to protect their numbers are the ones ready for deal-making,” he said.

 

“As long as you see my numbers being at the appropriate level, then you can conclude that I am ready for any kind of consolidation.”

 

Shares in Renault rose four per cent on the news, with traders citing media speculation over the potential collaboration.

 

But according to Automotive News Europe, some analysts are already questioning the proposed move and saying Europe would not be a priority for any potential Stellantis mergers and acquisitions activity.

 

Citing independent investment banking and financial services company Jeffries, the publication said a merger between Stellantis and Renault would face significant antitrust obstacles and would not offer Renault significant scale in other global markets.

 

Were the marque to join the Stellantis group, it would join brands including Abarth, Alfa Romeo, Chrysler, Citroen, Dodge, DS, Fiat, Jeep, Lancia, Maserati, Opel, Peugeot, Ram and Vauxhall.