Fiat Chrysler and Renault, two automakers who want to curb car and pool resource costs to develop next-generation cars, are planning a merger to create the world's third largest automaker.
According to a statement by Fiat Chrysler Automobiles, the combined business will be owned 50/50 between the shareholders of FCA and Groupe Renault. A board manager wanted a majority of independent board members.
The merger requires continued approval from the boards of both automakers.
The joint organization will produce an estimated sales of 8.7 million vehicles annually and is considered the world's third largest automaker.
Fiat Chrylser said the overall unit would generate savings of 5 billion euros a year ($ 5.6 billion) and be "executed as a merger transaction under a Dutch parent company."
The press release from Fiat Chrysler added that there would be no closure of the facility as a reult of tie-up and association would provide the opportunity to lead in the development of electric and autonomous vehicles.
During Fiat Chrysler's latest earnings call, CEO Mike Manley was asked for the opportunity to merge with another automaker and told analysts. "We go into an environment where there will be opportunities."
The Fiat Chrysler partnership with Renault is completely separate from the Nissan-Renault-Mitsubishi Alliance.
For Renault, the partnership with FCA renews speculation from the French The car dealer's alliance with Japan-based Nissan cannot last.
The two companies are holding each other, but the alliance has been strained since the arrest of Nissan-Renault's CEO Carlos Ghosn late last year. Ghosn has been charged in Japan by committing financial crimes while serving as CEO of Nissan, Ghosn charges and his lawyers violently denied.
Last year, Fiat Chrysler sold 4.85 million vehicles worldwide, with the bulk sold in North America where Jeep and RAM trucks are two of the most popular brands. Meanwhile, Renault sold 3,881