On Monday, Renault shares experienced a gain of over 4%, prompted by speculation in the media about a possible merger with rival Stellantis. According to undisclosed financial sources, the Italian newspaper Il Messaggero reported on Sunday that France is contemplating a merger between the two companies to enhance its influence in the automotive sector and counter competition from China and Germany. The companies are in a head-to-head battle for electric vehicles and autonomous driving technology, which are set to drive revenue growth over the next decade.
The combined firm would be a giant in the auto industry, with sales of more than a million vehicles a year and a market capitalization of about $90 billion. It also has the advantage of a firm brand name that could boost its prospects in an environment where carmakers face slowing demand and uncertainty over trade tensions.
Its current strategy is to focus on higher-margin SUVs, pickup trucks, and hybrid vehicles. It plans to sell about 400,000 of these vehicles this year and spend $18 billion over the next five years on developing new technologies. That will allow it to adjust its production to meet demand, which a weaker currency could boost.
However, it has struggled to profit from its investments, mainly because of falling demand and a costly shift to electric vehicles. Its stock has slumped nearly a quarter this year and is trading near its lowest in over two decades. The car maker’s share price has been hurt by the slowdown in China, where it makes a significant portion of its sales.
Tavares has taken the one-upmanship with Stellantis to another level, openly criticizing the company’s carving out of its EV business and bristling at suggestions that it isn’t investing enough in France. He also has arranged media events, including earnings calls, to run ahead of or coincide with those that Stellantis has already scheduled.
While the French government has sold some of its stake in Renault to raise money, it still owns a 19.7 percent chunk and uses its influence over its boards to protect jobs. Former chief executive Carlos Ghosn’s persistent efforts to combine Renault with Nissan were ultimately thwarted by political interference.
Renault, which has a global workforce of over 80,000, invests in the communities where it operates through its foundations and institutes. It supports projects focused on education through scholarships, road safety, and diversity. It also helps small and medium-sized enterprises, as well as local authorities. Through its music program, it has given away more than 500,000 copies of the song Johnny and Mary by Robert Palmer. The iconic tune is featured in several of its commercials. The company also has a wide range of cultural partnerships, and its Paris headquarters houses an art gallery and a library. In addition to its automotive operations, it owns an aviation unit and produces batteries. It also owns a sports club and is the title sponsor of the Paris Saint-Germain soccer team.