Fiat Chrysler Automobiles and the French carmaker Renault are holding discussions about a possible alliance aimed at strengthening both companies’ competitiveness in Europe and other parts of the world, a person familiar with the matter said on Saturday.
The talks are still in early stages and could still collapse, but they come amid significant technological and regulatory changes that are pressuring automakers and spurring some to join forces. Ford Motor and Volkswagen recently agreed to work together in pickup trucks and commercial vans and are in talks about combining their efforts to develop self-driving cars.
The specifics of the discussions between Fiat Chrysler and Renault were unclear on Saturday. They could potentially combine operations in Europe, where the companies compete directly in small and midsize cars. One option could be developing the underpinnings of cars jointly and manufacturing vehicles in each other’s plants, both money-saving moves. Working together could also allow both companies to close plants.
In Europe, the two companies face tighter environmental regulations that are forcing carmakers to invest billions in electric vehicles and other new technologies that cut tailpipe emissions. Both are also struggling to gain ground in China, the world’s largest auto market, and have been slower than some rivals in developing autonomous vehicles.
An alliance with Fiat Chrysler could give Renault access to the American market, where it currently has no presence. It was not clear how Nissan, Renault’s partner of nearly 20 year, would fit into a tie-up with Fiat Chrysler.
Renault needs Nissan, the dominant performer in the alliance, to continue contributing to Renault financially as the French automaker’s performance slips in Europe. Carlos Ghosn, the former chief executive of both Renault and Nissan, had sought to tie the two companies more closely by floating the idea of a merger or the creation of a joint holding company to face stiffening market competition. But the ties between the companies have frayed since November, when Mr. Ghosn was arrested and charged with financial wrongdoing in Japan, then ousted from his posts by both companies.
News of the talks between Fiat Chrysler and Renault was first reported by The Financial Times.
Until recently, Fiat Chrysler had been openly seeking merger partners. In 2015, its chief executive at the time, Sergio Marchionne, publicly proposed combining with General Motors but was rebuffed. Fiat Chrysler also explored the possibility of linking up with Chinese automakers. But since then, rising sales of pickup trucks and Jeeps have bolstered its coffers. And in January, Mr. Marchionne’s successor, Mike Manley, said he was confident Fiat Chrysler no longer needed a merger or an alliance, although he stopped short of ruling one out.
In recent months, vehicle sales have slowed, and Fiat Chrysler’s net profit fell 47 percent in the first quarter to 508 million euros.
Although auto companies are spending heavily on new technologies, it is unknown when or how their investments will pay off, especially as a global slowdown in car sales and concerns over trade wars cloud the horizon.
Compared with its rivals G.M. and Ford, Fiat Chrysler has been slower to develop electric and self-driving vehicles, and may now need partners to share the costs of research and development. It currently cooperates with PSA Groupe, Renault’s French rival, in small delivery vans in Europe.
Large-scale auto alliances are complex and difficult to manage. The merger of German Daimler with Chrysler in the 1990s was a costly failure. Renault’s alliance with Nissan was regarded as one of the more successful examples of cooperation until Mr. Ghosn’s arrest exposed the deep tensions in the relationship.
A recent leadership change at Renault has not fully alleviated the tensions — a problem that analysts say poses a risk to the performance of the alliance.
Renault’s new chairman, Jean-Dominique Senard, this month proposed merging the French carmaker with Nissan under a holding-company framework, citing fierce industry competition for electric vehicles and emerging technologies, as well as headwinds in the companies’ main markets.
The proposal, which was floated to Nissan behind closed doors but leaked to the Japanese media, was roundly rebuffed by Nissan’s chief executive, Hiroto Saikawa, who has long opposed the idea. He has sought to reshape the alliance’s balance of power, in which Renault owns a 43 percent stake in Nissan, while Nissan holds a 15 percent share in Renault that does not carry voting rights — a move that Renault, in turn, has opposed.
But pressure for a tie-up has intensified as Nissan’s performance flags. Nissan this month reported a 45 percent slump in operating profit in the last fiscal year, and warned of a near 30 percent drop this year. Renault officials have said they are highly concerned about Nissan’s performance, and see a merger as an essential step toward strengthening the alliance.