Patent Portfolio Analysis of proposed FCA and Renault merger
by Dr. Sarbani Chattopadhyay, on May 31, 2019 2:50:00 PM
The Press Release of FCA’s proposal for a ‘transformative merger’ with Groupe Renault brings forth the possibility of major change of scenario in the global automotive industry. The proposed merged entity is to be split equally between FCA and Renault shareholders. The merger is expected to allow the combined companies to have greater market coverage in terms of span of automotive technologies and global presence. As claimed by FCA, a noteworthy point in this proposal is the predicted incremental value expected to be routed to Nissan and Mitsubishi as members of the Renault-Nissan-Mitsubishi alliance.
Our analysis of the firms’ patent portfolios was aimed at gaining some insights into the probable effects that the proposed merger can have, both on the merged entity as well as on the individual members and their future strategies. For this analysis, we employed our Patent Asset Index™, which scientifically assesses patent family value based on their Technology Relevance™ and Market Coverage™.
Results of the merger: market perspective
The focus of the two companies FCA and Renault in terms of market coverage have been quite different. FCA’s main focus has been the US market where most of its active patents are maintained. Whereas, this is not the stronghold of either Renault or its other ‘Alliance’ partners Nissan Motors and Mitsubishi. However, the French company Renault concentrates mostly on France, as expected from a company that the Government of France invests in. FCA does not possess a large active patent portfolio in France. The possible larger collaboration with the ‘Alliance’ partners, through this proposed merger, benefits FCA with regard to the Japanese market where it does not have significant presence, much like Renault. Both the Japanese companies, Nissan Motor and Mitsubishi Motors, mainly concentrate on Japan. Thus making this deal, from a market entry point, sound good for them at least on paper. The apprehension of Nissan about the proposed merger, as reported in Automotive News, is not groundless as the strong presence of FCA in USA might thwart Nissan‘s attempts to capture the US market as its current presence there is far less, compared to FCA.
Results of the merger: technology perspective
Much like the difference in their filing strategies, the technologies in which the companies specialize are quite different as well. FCA doesn’t have a strong hold in the field of electric vehicles, as is evident from the very low proportion of its active patent portfolio in the IPC classes related to electric vehicles such as B60L and H01M. This is the field where Renault has stronger focus. This merger and the probable collaboration with the Alliance partners, can boost the prospects of FCA in the field of electric cars, as both Nissan and Mitsubishi Motors, like Renault, are relatively more focused on the field of electric cars.
Renault + Fiat: the Endgame
FCA has a relatively smaller patent portfolio in comparison to other well-known players in the automotive industry. But its quality is fairly high as seen from the high average Competitive Impact™ of the portfolio. Renault, as well, maintains a small patent portfolio. But its quality is less than par as calculated in terms of average Competitive Impact™. The combined FCA-Renault portfolio will see a marginal increase in the volume of patents while its quality as calculated by Competitive Impact™ would be average, which could be beneficial for Renault.
Nissan Motors maintains a larger portfolio, with higher quality, as compared to Mitsubishi and Renault. Assuming that the merger leads to technology being shared between all entities freely, the resulting FCA-Renault-Nissan-Mitsubishi collaboration could lead to a combined portfolio size that is comparable to other giants in the industry. The resultant quality of the combined portfolio will be around average, similar to that of Honda Motor, VW Group, Hyundai Motor and Toyota Motor. The portfolio strength of the combined portfolio would become comparable to that of the VW Group and Honda Motors as can be seen from the size of the bubbles in the above graph, which represents the Patent Asset Index™ of the portfolio. The quality of the combined companies’ patent portfolio is comparable to that of Toyota Motors that has the biggest portfolio size as well as portfolio strength in the automotive market. Thus, the proposed merger does seem to have all that it takes to shake-up the entire automotive industry.