Fiat Chrysler and Renault are in advanced calls to merge car manufacturers

FILE PHOTO: FIAT car manufacturer's logo is seen on a vehicle in Cairo, Egypt, May 19, 2019. Photo taken May 19, 2019. REUTERS / Mohamed Abd El Ghany / Filfoto

Mohamed Abd El Ghany | Reuters

Fiat Chrysler and Renault are in advanced talks to merge the two car manufacturers.

Sources say the conversations that have taken place in recent weeks have increased speed in recent days, and can lead to a merger or partnership announcement as soon as tomorrow.

The CEOs of both automakers have made it clear that they are open to partnerships with other automakers who will give them economies of scale to further cut costs both in manufacturing and in developing vehicles. The relocation can be particularly beneficial in Europe, where the total sales system is under pressure.

During Fiat Chrysler's last earnings call, CEO Mike Manley was asked for the opportunity to merge with another automaker. "We have made it clear earlier that we will be active and proactive in developing our business and improving the value of our shareholders," Manley told analysts. "We go into an environment where there will be opportunities."

Meanwhile, under former CEO Carlos Ghosn, Renault was increasingly interested in a full merger with Nissan, its partner in an alliance that has delivered mixed results. When the two automakers first formed their alliance in the late 1[ads1]990s, the combination of Nissan cut losses and eventually became a very profitable automaker. These days, there is growing tension between Nissan and Renault since the arrest and arrest of Ghosn late last year. The Japanese authorities have imposed on Ghosn a number of crimes related to his appointment as CEO of the Nissan-Renault Alliance.

If Fiat Chrysler finally joins the Nissan-Renault alliance, it's unclear.

A partnership between Fiat Chrysler and Renault will also help car manufacturers pool resources for the development of electric and autonomous cars. Renault's EV program is considered more advanced than Fiat Chrysler, but no automaker is considered a leader in electric vehicles.

A spokesman for Fiat Chrysler would not comment when it was reached by CNBC. Renault could not be reached immediately for comments.

CNBC's Meghan Reeder contributed to this report.

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