May 27, 2019, 3:25am ETby Ronan GlonThe merger would create the world’s third-largest automaker.The rumors were true: Fiat- Chrysler Automobiles (FCA) confirmed it has submitted a proposal for what it calls a transformative merger to Renault. If the deal goes through, which isn’t certain, the 50/50 merger would create the third-largest automaker in the world, with worldwide annual sales in the vicinity of 8.7 million.FCA published a statement on its corporate website to announce its intent to merge, and explain it has identified several potential areas of collaboration, though it didn’t name them. However, it cited the costs of connectivity, electrification, and autonomous driving as the main driving force behind the merger. Achieving economies of scale by joining forces with another automaker is vital.The statement stressed FCA doesn’t believe closing factories will be necessary. Instead, FCA identified economies of scale as the main source of savings. 40 percent of its projected savings would come from joint purchasing, 30 percent from R&D efficiencies, and 20 percent from manufacturing and tooling efficiencies. The two companies would notably reduce the number of vehicle platforms in their portfolio by 20 percent, and the number of engine families by about 30 percent.The statement calls for… Read full this story
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