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Renault delays decision on merger with Fiat Chrysler

PARIS — Renault has delayed a decision on whether to merge with Fiat Chrysler Automobiles, a deal that could reshape the global auto industry as carmakers race to make electric and autonomous vehicles for the masses. The deal still looks likely, but faced new criticism Tuesday from Renault's leading union and questions from its Japanese alliance partner Nissan. The French government is also putting conditions on the deal, including job guarantees and an operational headquarters based in France. The French carmaker's board will meet again at the end of the day Wednesday to "continue to study with interest" last week's merger proposal from FCA, Renault said in a statement. A Renault board meeting Tuesday to study the deal was inconclusive. The company didn't explain why, but a French government official said board members don't want to rush into a deal and are seeking agreement on all parts of the potential merger. The official, who spoke on condition of anonymity in line with government policy, told The Associated Press the conditions outlined by France's finance minister still "need to be met." France and Italy are both painting themselves as winners in the deal, which could save both companies 5 billion euros ($5.6 billion) a year. But workers worry a merger could lead to job losses, and analysts warn it could bog down in the challenges of managing such a hulking company across multiple countries. And a possible loser is Japan's Nissan, whose once-mighty alliance with Renault and Mitsubishi is on the rocks since star CEO Carlos Ghosn's arrest in November. Nissan CEO Hiroto Saikawa cast doubt Tuesday on whether his company will be involved in a Renault-Fiat Chrysler merger — and suggested adding Fiat Chrysler to the looser Renault-Nissan-Mitsubishi alliance instead. Saikawa said in a statement that the Renault-Fiat Chrysler deal would "significantly alter" the structure of Nissan's longtime partnership with Renault, and Nissan would analyze its contractual relationships to protect the company's interests. If Renault's board says "yes" to Fiat Chrysler, that would open the way for a non-binding memorandum of understanding to start exclusive merger negotiations. The ensuing process — including consultations with unions, the French government, antitrust authorities and other regulators — would take about a year. A merger would create the world's third-biggest automaker, worth almost $40 billion and producing some 8.7 million vehicles a year.

Chrysler Recalls Jeep SUVs For Ignition Switches

The ignition switch defects that engulfed General Motors are now a rapidly growing problem at Chrysler. Chrysler said Tuesday it is recalling up to 792,300 older Jeep SUVs worldwide because the ignition switches could fall out of the "run" position, shutting off the engine and disabling air bags as well as power-assisted steering and braking. That's the same problem that has forced GM to recall more than 15 million cars over the last six months. Chrysler's recall covers 2005-2007 Grand Cherokees and 2006-2007 Commanders. The company said it is not sure exactly how many will be recalled, but said it will notify customers by mid-September. Chrysler said an outside force such as a driver's knee can knock switches out of the "run" position. Engineers are working on a fix. The Auburn Hills, Michigan-based automaker, now part of Fiat Chrysler Automobiles NV, said it knows of no related injuries and only one accident. But it said owners should keep clearance between their knees and keys until repairs are made. Chrysler has now recalled more than 1.7 million vehicles for ignition-switch problems. In June, the company added 696,000 minivans and SUVs to a 2011 recall to fix faulty ignition switches. Those recalls covered Dodge Journey SUVs and Chrysler Town & Country, Dodge Caravan and Volkswagen Routan minivans - which Chrysler made for the German automaker - from the 2007 to 2010 model years. Tuesday's recall is the outgrowth of two investigations opened by U.S. safety regulators last month as part of a broader probe into ignition-switch and air-bag problems across the auto industry. The agency wouldn't say Tuesday whether its investigation could lead to recalls at other automakers. The National Highway Traffic Safety Administration said in June that it was investigating Jeep Commanders and Grand Cherokees after getting 32 complaints that a driver's knee can hit the key fob or key chain, causing the ignition switch to move out of position. The federal investigation is still open. The agency said Tuesday that it is requesting additional information from Chrysler to ensure that its repairs will be effective. The investigations and recalls come after GM bungled an ignition-switch recall of older small cars. GM acknowledged that it knew of the ignition problem for more than a decade but failed to recall the cars until earlier this year, when it recalled 2.6 million small cars such as the Chevrolet Cobalt.

Marchionne urges industry consolidation, again

Sergio Marchionne isn't just an instigator of mergers – he's also a staunch advocate for their need in the industry. And he seems convinced another big one will happen in the next few years. "I am absolutely certain that before 2018 there will be a merger," said Marchionne. "It's my personal opinion, based on a gut feeling." Though the terms "absolutely certain" and "gut feeling" would seem to convey vastly different degrees of certainty, his chief's statement would seem to suggest some inside knowledge of an impending deal. Marchionne, of course, brokered the consolidation of the Fiat Chrysler Automobiles empire over which he now presides, and has been actively seeking another merger to help reduce redundancy and overhead between major automakers in the industry. With which automaker he might be seeking such a merger, however, remains a big question. He was recently reported to have approached Mary Barra regarding a potential merger with General Motors, but was said to have been rebuffed. The Italian-Canadian executive may not be alone in his advocacy for industry consolidation, though. Opel chief Karl-Thomas Neumann said that "In principle, Marchionne is right – the auto industry develops the same things ten times over." Bringing major automakers together would ostensibly reduce that redundancy. Marchionne had been linked to a potential takeover of Opel when GM was shedding brands post-bankruptcy, but in the end the Detroit giant opted to keep its European division in-house.