7 June 2019

Fiat and Renault- was it something I said?

Last week’s postscript was chopped from the article for reason’s best explained by our excellent production team.

However, here it is: “ Time is running out on the 180 days truce on tariff negotiations between EU and the USA. Soon there will be a new EU governing regime whilst President Trump will threaten further pressure on the EU in the hope they offer a better tariff deal. Ford and GM see tariffs as a potential own goal what with the threat of retaliatory action by Europe. Meanwhile, many European manufacturers have factories in the US. The EU car market is sluggish thanks to the ongoing Brexit saga; various populist groups calling for the break up of the EU and, of course, Russian influence waiting to pounce like a cat if the opportunity arose. Politics has to stop being bad medicine for the worldwide auto industry and soon.”

Honestly, this was written last week but it has proven to be somewhat prescient given events this week.

Last week I questioned the merits of a Renault Fiat merger (or was it a takeover?) including Fiat’s motives and whether it was a good move for two old guard joining forces when maybe they should be looking at brighter younger things not from the traditional automotive scene. Equally, I was optimistic suggesting it could be Fiat’s chance to create a usable affordable electric vehicle for the masses and follow in the tyre tracks of Model T; Beetle and Mini.

At one point it seemed all systems were go but like politics a week is a long time in auto land too. It seems that Renault’s 15% French government shareholder considered this was not the time to consort with their Italian cousin who despite all their latino cool are lagging in the EV and autonomous market. President Macron is not popular at home so I suspect national pride intervened on what could have been an expedient industrial consolidation.

The merger seems a short romance but Renault may just like to takes things a bit more slowly, for instance wait until Fiat gets panicky about its emissions compliance and swoop in with Renault as the stronger party. Cynical as it sounds this is a possible scenario.

Whatever the outcome Fiat I suspect needs to move quickly to remain relevant. (Of course, they could be doing all sorts of splendid EV things in the background but I can only comment on what is apparent).

This ties in with another political event, President Trump’s UK visit.He spoke about doing great trade with Britain post Brexit with cars being one pet area. The Donald would like to see more US cars on British roads than German wheels. At one point the US did when GM owned Opel and Vauxhall, whilst Ford seems to be retreating in Europe compared with its might and market share of the 1970s and 1980s. In 2017 Germany’s Deputy Chancellor responded to the US President suggesting for the US to have better market share they should “build better cars”. Not only better cars but cars suitable for European roads- many of their cars are just too big and clunky.

What’s the solution well maybe for Tesla and Fiat to join forces. Tesla wishes to scale up capacity; increase distribution networks, have greater auto know how and crack lower price segment markets not just premium. It could be a great fit.

Finally, troubling to see what is happening at Ford’s Bridgend engine plant. It is always saddening to hear of any closure but it was only a handful of years ago the factory was at the core of Ford’s worldwide engine capacity. Could it become the basis of a giga battery factory? Would Ineos take it on for their proposed Land Rover rival? Let’s hope something good happens.

Various factors influence the Bridgend decision including Brexit uncertainty; short sighted taxing policies on diesels and even removing subsidies on hybrids and electric vehicles contributing to consumer uncertainty about what to buy. Political will has taken its toll at Bridgend- I think I am back to where I started this article.

Julian Wilkins

Postscript: I hope Fiat make the right alliance for the sake of Alfa Romeo whose cars whilst often flawed stir the emotions few other cars can. I remember being at the 2005 Geneva Motor Show to see the launch of the 159 and was probably the first person to sit in it. They have a tremendous heritage including Alfa Sud to the current critically acclaimed Giulia. Even the French may acknowledge that Alfa’s cars evoke more passion than a cinq a sept encounter. There are many worthy and intellectually brilliant vehicles but few have soul- the auto industry should nurture Alfa like a protected species; life will be less if Alfa became another demised brand.

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