France is considering a merger between the two automakers to strengthen its grip on the sector and counter Chinese and German competition, Il Messaggero said.
Shares in Renault initially rose more than 4 percent on Monday, with traders citing media speculation over the potential combination. They pared gains to 1 percent after Elkann’s comments.
After abandoning Russia, at the time its second-largest market after France, following Western sanctions following its invasion of Ukraine, and reducing the scope of its global cooperation with Nissan, Renault has been seen as a potential M&A target.
Speculation intensified after an electric vehicle market slowdown forced the automaker to cancel IPO plans for its EV and software unit Ampere.
Renault is led by Luca de Meo, an Italian whose previous roles included working at Fiat.
Renault’s market cap remains stubbornly low at little over 10 billion euros ($10.8 billion) despite a financial recovery over the past few years.
Stellantis is one of the most profitable groups in the industry and has a market cap of more than 85 billion euros when unlisted shares are factored in.
Stellantis is the product of a merger in 2021 between France’s PSA group and Fiat Chrysler Automobiles, with brands including Fiat, Peugeot and Jeep. Stellantis’s 14 brands include Citroen, Jeep, Opel and Alfa Romeo.
Excess capacity
Analysts question the rationale of a Stellantis-Renault merger, which would also expand excess capacity in Europe.
Jefferies last week said that Europe would not be the priority for any potential Stellantis M&A activity, with Renault not offering significant scale in other areas of the world, while a deal would also face antitrust obstacles.