Fiat Chrysler has made a “transformative” merger proposal for French carmaker Renault, the Italian firm said on Monday.
The combined business would be 50% owned by Fiat shareholders and 50% by Renault stockholders.
The carmaker said the merger would create a global automotive leader, with 8.7 million vehicle sales.
Carmakers have faced pressure to consolidate amid major industry shifts, including towards electric vehicles.
In a statement, Fiat said the planned merger would create a “world leader in the rapidly changing automotive industry with a strong position in transforming technologies, including electrification and autonomous driving”.
No plant closures would be caused as a result of the tie-up, the carmaker said.
Fiat said that if the firms’ 2018 financial results were totted up, the combined company’s annual revenues would be nearly €170bn (£149.6bn; $190.5bn), with operating profit of more than €10bn and net profit of more than €8bn.
Industry shifts toward electric models, along with stricter emissions standards and the development of new technologies for autonomous vehicles, have put increasing pressure on carmakers to consolidate.
Renault already has an alliance with Japan’s Nissan, in which research costs and parts are shared. The companies own shares in each other, too. Renault owns 43.4% of Nissan’s shares and Nissan owns 15% of Renault.
The former chief executive of both Nissan and Renault, Carlos Ghosn, is awaiting trial following his fourth arrest amid allegations of financial misconduct.
The allegations have put a strain on the 20-year-old alliance, which also includes Japan’s Mitsubishi Motors.
New entrants in the motoring sector such as Tesla, as well as cash-rich companies developing driverless technology such as Amazon and Google-owned Waymo, are putting pressure on older and often heavily indebted carmakers to keep up.