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Could another sign change be in Fiat Chrysler's future?

Fiat Chrysler Automobiles N.V. is apparently being pursued by not one, but now possibly two French automakers.

Reports have the Agnelli clan turning down an overture from Peugeot but Renault S.A., which also is still trying to re-organize its alliance with Nissan in the wake of Carlos Ghosn’s legal troubles and abrupt ouster, is also interested in pursuing a tie with FCA, according to an article Financial Times.

A deal could give FCA better options to solve its problems with technology where it lags larger rivals and help strengthen its position in Asia. The prospect of becoming part of an $80 billion global group could be tempting for FCA Chairman John Elkann.

However, any deal appears far off at this point even if the principals are willing. The fallout from the ouster of Ghosn, who is now under the equivalent of house arrest in Tokyo, is the three-way alliance is now being re-examined.

(A new partner for Fiat Chrysler? Peugeot says maybe. Click Here for the story.)

FCA CEO Mike Manley has said the company might be open to talks with other automakers.

However, before FCA could be partnered with Renault, the Renault-Nissan alliance, which has been strained by the Ghosn affair. The French and Japanese companies would require a change of heart by either Nissan or the French government.

The state owns 15% of Renault, which in turn owns 43% of Nissan, understandably raising Japanese fears of meddling by authorities in Paris. It’s also hard to see President Emmanuel Macron scaling back the government’s influence to help pave the way for a union with Nissan that could lead to French job losses, observers noted.

The creation of a new alliance board led by Renault chairman Jean-Dominique Senard has improved confidence that the two sides can push ahead with merger plans, the newspaper reported Wednesday, citing unidentified people familiar with both sides’ thinking, observers said.

The partnership this month agreed to a new governance structure designed to streamline operational decisions, with Senard placed as the chairman of the alliance. Beyond the complicated questions involving corporate governance, the reorganization triggered by a larger merger would be daunting, analysts said.

(Click Here for details the possibility Fiat Chrysler without Fiat.)

Most of the expected costs savings essential to fund future high-tech developments would come from streamlining operations in Europe, where FCA and Renault together have roughly 85 production sites. European layoffs would not go down well with Italy’s anti-austerity government, nor with France’s “yellow vest” protesters.

Renault Chairman Jean Dominique Senard is leading the newly formed board of directors for the Renault Nissan Mitsubishi Alliance.

But concerns about the political impact of the potential cuts to the company are also a potential obstacle to a more immediate deal with Peugeot Chief Executive Carlos Tavares.

A combination of Renault, Nissan, Fiat and Chrysler would create an automaker that could better compete against global competitors such as Volkswagen AG and Toyota Motor Corp.

Ghosn, the former chairman of Renault and Nissan who was arrested in Tokyo in November on charges of financial wrongdoing, had held talks about merging Renault with Fiat Chrysler two to three years ago, the Financial Times reported, citing two unidentified sources. Ghosn’s proposal was stopped by the French government, the newspaper said.

(For more about FCA’s search for a partner, Click Here.)

The late Sergio Marchionne, who was FCA’s CEO up until his death in July, had also spoken of the need for broader consolidation in the auto industry given its propensity to chew up capital.

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