Fiat Chrysler Scuttles Renault Merger, Mexico Tariffs Loom Large For The Auto Industry

Welcome to a very Motor City-centric edition of your Daily Detroit. Today, we're running down a pair of big stories from the auto industry, speaking with Kristin Dziczek, vice president of the Center for Automotive Research in Ann Arbor.

First up: Fiat Chrysler has withdrawn its $35 billion proposal to merge with French automaker Renault just 10 days after FCA first announced the proposal. It comes after the Renault board on Wednesday failed to reach a decision on the proposal, citing the French government's request to postpone a vote. The Wall Street Journal also reported that Nissan's two representatives on the Renault board also objected. 

Renault owns a stake in Nissan as part of a long-running alliance with the Japanese automaker, while the French government owns a 15% stake in Renault.

Fiat Chrysler's board met Wednesday evening and voted to withdraw its proposal with immediate effect, saying that although it remains convinced of the compelling rationale for the merger, "it has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully." 

Secondly, we discuss the news that President Trump may levy 5% tariffs against all goods imported from Mexico starting next week and gradually ramp them up to as high as 25%.

As Dziczek explains, that's problematic for a host of reasons, since automakers source many components including wire harnesses from Mexico for cars sold in the U.S., and about 15% of cars sold domestically were actually built at factories south of the border. Even for consumers, there's a good chance that those replacement windshield wipers or brake pads you buy from O'Reilly's were made in Mexico.

It's a fascinating conversation. Thanks for listening to Daily Detroit. If you like what you're hearing, tell a friend about us, leave us a review and subscribe on Apple Podcasts, or support us by becoming a Patreon member.