Fiat Chrysler seeks a merger with Renault

THE RISE of the SUV over the past decade demonstrates that carmakers have done an excellent job of persuading customers that bigger is better. Renault and Fiat Chrysler Automobiles (whose chairman, John Elkann, sits on the board of The Economist’s parent company) are hoping to convince investors that the same is true of carmakers themselves. On May 27th the Italian-American FCA confirmed rumours that it was seeking a merger with its French counterpart, itself part of a close alliance with Japan’s Nissan and Mitsubishi. If a deal goes ahead it will create an automotive colossus.

Together, the two companies currently sell nearly 9m cars a year for €170bn ($190bn), generating an operating profit of around €10bn. That alone would put the combined firm in third place behind only Toyota and Volkswagen (VW), each of which produces around 10m cars annually. Add in Renault’s alliance partners, however, and the new group’s combined total of 15m cars would leave everyone else in the dust.