NOVEMBER 16, 1998
Renault and Fiat
WHILE the Formula 1 world has been unusually quiet in recent days there has been one piece of industry news which has raised interesting long-term questions. FIAT - the parent company of Ferrari - has announced that its foundry subsidiary Teksid SpA is to take over Renault's four foundries in exchange for a 33% share in the company.
Both sides deny that this is a significant step towards a merger of their automotive operations but it is the second major deal between Renault and FIAT, the first having been a merger of their bus-making operations, and it comes at a time when there is a global move towards consolidation in the automobile industry in the wake of the Daimler-Chrysler merger and warnings that Europe's car companies need to merge to survive.
A merger of FIAT and Renault would create Europe's biggest automobile manufacturer - larger than Volkswagen and Daimler-Chrysler - but still smaller than world leaders General Motors, Ford and Toyota.
It would, however, create problems in Formula 1 where FIAT has traditionally only been represented by one of its companies. For more than 10 years FIAT policy has been to support Ferrari in Formula 1; Alfa Romeo in touring cars and Lancia in rallying.
It is worth remembering that when FIAT bought Alfa Romeo in 1986 the firm's F1 program was terminated within a matter of months, despite the fact that Alfa Romeo engineers were working on the development of a normally-aspirated V10 engine.
A full-scale merger between FIAT and Renault would put paid to plans for Renault to return to F1. And that could be disastrous news for Benetton and British American Racing which have dreams of using Renault engines in the future.