A couple of years ago, FCA chairman Sergio Marchionne tried to force a merger with General Motors. His plan failed and now the company’s European business could be struck a serious blow if GM sells Opel to Peugeot and Citroen.
According to recent reports, General Motors is indeed pondering exiting the European market by selling Opel. If this comes to fruition, it means that Volkswagen, PSA and Renault-Nissan will control 54 per cent of the European automotive market. By comparison, Fiat has just a 6.6 per cent share at the moment.
Consequently, it is unlikely that any other major automakers would want to form a partnership with FCA, seen as how its operating margin in Europe last year was just 2.5 per cent, despite a 7 per cent growth in the local market.
According to the New York Times, things could get even harder for Fiat. It is reported that the brand has the highest carbon dioxide emissions footprint of any carmaker in Germany and that it could miss 2021 carbon dioxide targets without some serious changes and investments in efficiency.
Sergio Marchionne is therefore left between a rock and a hard place trying to grow FCA internationally without the help of another automaker by its side. The brand’s current $4.87 billion in net industrial debt could also rise further, particularly given the company’s aggressive future product plan.
What is the solution? It is difficult to say at this stage but something certainly has to give.
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