Fiat Chrysler chief Sergio Marchionne has made no secret of his desire for another merger. But without no major automakers in Europe or America showing any interest, Marchionne’s switching his focus to the Far East. And it could bear fruit in the form of a buyout at any moment.
Automotive News reports that FCA has been entertaining offers by several major Chinese automakers. Apparently none of them have been sizable enough, but if any of the leading contenders should increase their bids sufficiently, it could be as simple as signing on the dotted line and handing over the keys to the kingdom.
Among those identified as expressing interest are Guangzhou, Geely, Dongfeng, and Great Wall. FCA and Guangzhou already partner on a joint venture to manufacture in China for the local market, while Geely in particular has been snapping up foreign automakers one after the other – including Volvo, London Taxi, Proton, and Lotus.
The impetus for the foreign expansion reportedly comes from the Chinese government, which has been encouraging domestic manufacturers across multiple industries to buy up companies in their field around the world. Sources expect Chinese companies to spend $1.5 trillion on foreign acquisitions over the next decade. But the prospect of a potential FCA acquisition would satisfy more than Beijing bureaucrats.
Chinese automakers have been desperate to break into the large and lucrative North American market, and with the quality of their products having ostensibly improved, it could come down to infrastructure. And FCA has that in spades: 162 manufacturing plants around the world, 87 R&D facilities, and an extensive dealer network that numbers 2,600 showrooms in the United States alone. Executives from some major Chinese automakers have reportedly even gone so far as to meet with representatives of major American dealer groups in preparation for a possible FCA takeover, with reciprocal delegations traveling between China and Michigan to work out details.
The development follows earlier possibilities for takeover from within the Western world have fallen through – most notably from Volkswagen (whose resources are tied up in the diesel emissions debacle) and General Motors (which was less interested in the prospect than Fiat Chrysler was). With no offers incoming, Marchionne set upon a course to court acquisition, taking steps such as discontinuing production of unprofitable small cars and focusing on the pickups, SUVs, and minivans it does well.
A Chinese takeover would be just the latest in a long history of mergers and acquisitions at Fiat and Chrysler. Aside from the former having acquired the latter, Chrysler (which acquired Jeep and Eagle from the defunct American Motors) was previously owned by Mercedes parent Daimler, while GM previously held 20 percent of Fiat (which had in turn gobbled up Lancia, Alfa Romeo, Maserati, and Ferrari, among others).
While a potential takeover would likely include the Fiat, Chrysler, Dodge, Jeep, and Ram brands, FCA and its owners could spin off certain properties from the group as separate entities – much as it did with Ferrari and the industrial and agricultural divisions under the CNH Global umbrella. Alfa Romeo and Maserati could be separated, as could suppliers like Magneti Marelli, Teksid, and Comau.