Neither Renault nor the French Industry Ministry would comment officially. However, in an interview with Le Figaro, Gerard Longuet, the Industry Minister, said a merger was 'indispensable' and could precede Renault's privatisation.
The capital structure of the merged group will depend to some extent on plans for Renault's privatisation, which is in the government's programme but has not yet been scheduled.
It is understood that the merger will not result in any change in the status of Renault staff.
For the French side to retain decision-making control, the structure and regulations established for the new group are certain to ensure that Volvo cannot bid in the market for shares held by minority shareholders.
On Thursday the French daily paper Liberation suggested that all Renault shares held by the French state, institutions and private investors would be transferred into a new company, perhaps called Renault Investissement. Renault Investissement would take 55 per cent in a newly created Renault Volvo Holding company, in which Volvo would hold a 45 per cent stake.