Fiat Chrysler Automobiles (FCA) Chairman John Elkann said that a deal with French carmaker Renault would create the world's third largest automaker, while speaking at Bocconi University in Milan on Monday.

"With Renault we are going to become the third most important carmaker in the world, the largest if we consider our Japanese partners Nissan and Mitsubishi. Coming from the experience of Fiat and Chrysler with FCA, we are very encouraged by what we can do together", said Elkann.

FCA proposed an all-share merger with Groupe Renault, which would create a combined business owned 50/50 between the two groups' shareholders. If the 35 billion dollar [32 billion euros] deal goes ahead, the joint business would produce estimated sales of 8.7 million vehicles yearly.

Groupe Renault confirmed it reviewed FCA's friendly proposal and is currently studying it.

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