Fiat Chrylser has proposed a merger with French carmaker Renault, which could ultimately progress into an alliance with Nissan and Mitsubishi as well. If this deal goes through, it could become the biggest automobile alliance in the world, overthrowing Volkswagen.

A statement from Fiat Chrysler confirms the news that both companies’ shareholders would enjoy an equal stake in the merged business. The deal could not only create a new leader in the highly competitive automobile sector but also help address weaknesses in Fiat Chrysler and Renault respectively.

However, it remains to be seen what impact the arrest of Nissan chief Carlos Ghosn will have on the proposed merger and the subsequent potential partnership with Nissan and Mitsubishi.

Rising costs of innovation in the field of electric, connected and autonomous vehicles, coupled with tightening emissions norms worldwide are creating new challenges for automobile manufacturers in the present day. A merger like the one between Fiat Chrysler and Renault offers an opportunity to combine resources and take on such challenges more effectively.