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Strains between France and Italy risk Renault-FCA merger

PARIS/ROME — Fiat Chrysler's proposed $35 billion merger with Renault has cheered investors, won conditional support from Paris and Rome and even earned cautious backing from trade unions. Beneath this veneer, however, the bold attempt to create the world's third-largest carmaker risks becoming rapidly embroiled in the fraught relationship between France's europhile President Emmanuel Macron and Italy's euroskeptic leaders. For while Deputy Prime Minister Matteo Salvini hailed the proposal as a "brilliant operation," Italy's creaking, state-subsidized Fiat factories are likely to bear the brunt of any production-related cost savings. FCA and Renault said this week that more than 5 billion euros ($5.6 billion) of annual savings would come mainly from combining platforms, consolidating powertrain and electrification investments and the benefits of increased scale. Salvini and France's Finance Minister Bruno Le Maire, who called the deal a "good opportunity" to build a European industrial champion able to compete with China and the United States, have both said they want guarantees on local jobs. "It's not every day that I agree with Salvini," said Le Maire, whose government appears to hold the trump cards. When it comes to where any job cuts fall, France will be helped by its existing 15 percent holding in Renault, whose superior efficiency at its five French plants makes it better placed to handle a supply glut, the demise of the petrol engine and the investments needed for electric and autonomous vehicles. "It will take many, many years to find real savings, and ugly political and operational realities can often swamp the potential of such new entities," Bernstein analyst Max Warburton said of the FCA-Renault plan to rival Japan's Toyota and Germany's Volkswagen. Advantage France? As well as Italy's government having to cope with the aftermath of European elections, which coincided with news of the FCA-Renault plans, political leaders in Rome were only informed shortly before the deal was made public, an FCA source said. This contrasted with the way the French government was treated, with Fiat Chrysler Chairman John Elkann, a fluent French speaker, letting it know of his merger proposal to Renault weeks ago, a French government official said.

Auto sales in March and first quarter down nearly across the board

Nearly every major automaker reported weak U.S. sales for March and the first quarter of 2019, citing a rough start to the year, but said a robust economy and strong labor market should encourage consumers to buy more vehicles as 2019 rolls on. GM, which no longer releases monthly sales figures, saw first-quarter sales fall 7 percent, with declines across all brands. Sales of Silverado pickup trucks fell nearly 16 percent and the high-margin Chevy Suburban large SUV dropped 25 percent. Ford also no longer releases monthly sales numbers, but is due to release its first-quarter sales figures on Thursday. According to industry data, Ford's sales fell 2 percent in the quarter and 5 percent in March. Ford representatives did not immediately respond to requests for comment. FCA reported a 7 percent fall in U.S. sales in March and a 3 percent drop for the first quarter. All of FCA's brands dropped in March, except for Ram, which saw a 15 percent increase in pickup truck sales. "The industry had a tough first quarter, but with spring finally starting to show its face and continued strong economic indicators ... we are confident that new vehicle sales demand will strengthen going forward," FCA's U.S. head of sales, Reid Bigland, said in a statement. Toyota reported a 3.5 percent fall in U.S. sales in March and 5 percent for the first quarter, hurt by declining demand for its Corolla sedans and Camry vehicles. "While some of our competitors are abandoning sedans, we remain optimistic about the future of the segment," Toyota said in a statement. Nissan posted a 5.3 percent drop in sales in March, and its first-quarter sales were down 11.6 percent. Honda and Hyundai bucked the trend. Honda's U.S. sales rose 4.3 percent in March and 2 percent in the quarter, while Hyundai's were up 1.7 percent and 2.1 percent, respectively. Passenger-car sales suffered throughout the January-March quarter compared with the same period in 2018 as Americans continued to abandon them in favor of larger, more comfortable pickup trucks and SUVs, which are far more profitable for automakers. The battle for market share in the particularly lucrative large-pickup truck market intensified in the quarter, as Fiat Chrysler Automobiles' Ram brand outsold the U.S.' No. 1 automaker General Motors' Chevrolet-brand trucks. The two automakers have both launched redesigned pickup trucks.

Nissan CEO plans to deliver 'raw details of the misconduct' to Renault

TOKYO/PARIS — Nissan Motor's CEO plans to meet one-on-one with the deputy CEO of automaking partner Renault in Amsterdam this week, sources told Reuters, amid tensions over the future of the alliance after Chairman Carlos Ghosn's arrest last month. The meeting would be the first face-to-face interaction between Nissan's Hiroto Saikawa and Renault's Thierry Bollore since Ghosn was arrested on Nov. 19 in Tokyo. It would take place alongside regular top-level, monthly talks between the partners and Mitsubishi Motor Corp that will be held over two days from Tuesday, according to one of the sources familiar with the matter. Saikawa, who took over from Ghosn as CEO last year, is planning to discuss at the meeting with Bollore possible changes to the partnership's management and operations with an eye to continuing the alliance, another source who is close to Nissan's management said. The talks in Amsterdam could provide Saikawa with an opportunity to try and convince Renault executives of the gravity of Ghosn's alleged misconduct discovered during an in-house investigation by the Japanese automaker. They are being held a day after Saikawa rebuffed a demand from Renault for an extraordinary shareholder meeting that would have offered the French car maker a chance to weigh in on Ghosn's replacement as chairman and on other Nissan board appointments. Mitsubishi Chairman Osamu Masuko said late on Monday he will attend the Amsterdam meetings via video conference. A Nissan spokesman said Saikawa would attend meetings with alliance partners in Amsterdam from Tuesday, but declined to comment on the possibility of the one-on-one meeting with Bollore. Ghosn was charged last week alongside alleged accomplice Greg Kelly and Nissan itself over the company's failure to declare $43 million in deferred income that Ghosn had arranged to be paid while chairman and CEO. Both men remain in custody. The scandal has shaken the Renault-Nissan-Mitsubishi alliance, with Saikawa calling for changes to weaken Renault's control as he moved to oust Ghosn in the week of his arrest. Renault directors were briefed last week on the Nissan investigation that led to Ghosn's arrest but reiterated their earlier decision to keep him in office as chairman and CEO. But the Renault board has yet to be given direct access to Nissan's findings, which are being closely held by Renault lawyers answering to Ghosn's long-standing chief of staff and head of legal affairs at Renault, Mouna Sepehri.