Agencies across the world should prepare for another kicking if the proposed €33bn merger between Fiat Chrysler Automobiles (FCA) and Renault goes through. Renault also has a partnership arrangement with Nissan (not very happy at the moment) and Mitsubishi. The merger would be 50/50, all in shares.
The new company would be the world’s third-largest behind VW and Toyota with combined revenue of €170bn and net profit of €8bn plus, according to FCA. The ostensible reason is the need to collaborate on vastly expensive exercises such as developing electric and self-driving cars. FCA says no plant closures are planned although, in such deals, they nearly always occur.
Shares in both companies rose on the announcement and the French government, a 15 per cent shareholder in Renault, doesn’t seem opposed. So a deal looks more likely than not.
Both companies have lost their long-time leaders recently. Sergio Marchionne, the architect of FCA, died unexpectedly while Renault’s Carlos Ghosn is on trial in Japan over alleged financial misconduct. This is reported to be partly a consequence of his plan to absorb Nissan, in which Renault has a 43 per cent stake, wholly into Renault.
The two car giants employ a multitude of agencies across the world and some of them will lose business while others will find the search for cost savings slicing into their margins. VW is currently in the closing stages of just such an exercise, one that has seen just about every non-conflicted agency in the UK pull out of a “procurement-led” pitch for Audi. Incumbent BBH and Engine (formerly WCRS) are the two left standing.
Renault has been a long term Publicis Groupe client and French marcoms company will be pulling all the extensive strings at its disposal to ensure it retains a seat at the merged car giant’s top table.