Fiat Chrysler says French politics ended Renault merger

PARIS (AP) — Fiat Chrysler abruptly withdrew an offer to merge with French automaker Renault late Wednesday, a shocking reversal of a deal that could have reshaped the global auto industry.

The Italian-American automaker blamed its move on France's government, saying that the country's political climate would stop the tie-up from being successful. The government owns 15% of Renault and would have had to approve the merger.

"It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully," Fiat Chrysler said in a statement. "FCA will continue to deliver on its commitments through the implementation of its independent strategy."

Officials on each side blamed the other for making demands that caused the deal to fall apart with little hope of revival. The moves came on a tumultuous day in which FCA and the government reached a tentative deal on merger terms but it was scuttled later as Groupe Renault's board met for six hours outside of Paris. The board postponed any action on the merger at the government's request, Renault said.

Fiat Chrysler proposed the 50-50 merger in late May, saying it would save more than 5 billion euros ($5.62 billion) per year in purchasing expenses and costs developing autonomous and electric vehicles. The combined company would have produced some 8.7 million vehicles a year, more than General Motors and trailing only Volkswagen and Toyota. The merger would have created the world's third-largest automaker worth almost $40 billion.

Nissan, which has a longtime alliance with Renault, expressed reservations about the deal. But if it had gone along, it would have created the world's biggest auto company.

Most analysts praised the combination, saying each side bought strengths that covered up the other's weaknesses. Now, the two...