File picture: Tony Gentile / Reuters.

Rome - Fiat Chrysler is proposing a 50-50 merger with Renault to create the world's third-largest automotive group behind Volkswagen and Toyota.

The combination, accounting for 8.7 million annual sales, would have "a strong market presence in key regions" and a "broad and complementary brand portfolio," FCA said in a statement on Monday.

Renault's core market is Europe, but it has a good footprint in Asia through its alliance with Japanese carmakers Nissan and Mitsubishi, while FCA is strongest in North and Latin America.

If Nissan and Mitsubishi are counted in, the FCA-Renault tie-up would create the world's largest carmaker with more than 15 million annual sales, FCA said.

Renault and FCA "would be a world leader in [electric] technologies, premium brands, SUVs, pickup trucks and light commercial vehicles," the Italo-American company said.

It added that the merger would not result in any plant closures and create annual synergies worth 5 billion euros (R80.7bn) on top of those from the existing Renault-Nissan-Mitsubishi alliance.

"The case for combination is also strengthened by the need to take bold decisions to capture at scale the opportunities created by the transformation of the auto industry in areas like connectivity, electrification and autonomous driving," FCA said.

Renault confirmed having received the proposal.

Renault's board of directors will discuss the offer in the morning and then comment in writing, the company said in Boulogne-Billancourt near Paris.

FCA, whose brand portfolio includes Alfa Romeo, Jeep and Maserati, had long been rumoured to be looking for a partner, especially after the death of its long-time boss Sergio Marchionne last year.

It said it made the proposal to Renault after initial talks between the two companies revealed that a full merger "would substantially improve capital efficiency and the speed of product development."

dpa