Fiat boss tight-lipped on GM tie-up reports

29 May 2015 | Author: | No comments yet »

FCA’s Deal Hopes Shouldn’t Drive Strategy.

“I am absolutely certain that before 2018, there will be a merger,” Marchionne told reporters during a visit to a Fiat Chrysler plant in southern Italy. “It’s my personal feeling based on a gut feeling.” Executives in the auto industry have long bemoaned the enormous costs of developing new models of cars and trucks and the immense amount of technology required for the vehicles. Marchionne has reportedly approached General Motors about a possible hookup with Fiat Chrysler, supposedly e-mailing a merger proposal to GM CEO Mary Barra this month. Morgan Stanley MS 0.28 % estimates Jeep sales will reach 1.73 million cars by 2018, implying a 15% annualized growth rate, or about four times the broader global sector. Marchionne said he could not confirm a report in the New York Times on Saturday that he had sent an e-mail to GM Chief Executive Mary Barra in March suggesting combining the auto makers, but was rebuffed.

Sources familiar with the situation told Reuters in April that Marchionne was hoping to seal a big deal for FCA, possibly in the United States, to plug his group’s weaknesses but that he may struggle to find a partner. Any merger would involve huge labor and regulatory headaches in Europe, as well as presenting challenges to integrate about two dozen brands globally. And the automaker’s market capitalization — the value of the company — is just $20.4 billion, or about $11 billion shy of upstart electric carmaker Tesla’s $31.3-billion market capitalization. Marchionne and Chairman John Elkann are weighing in on industry consolidation just to vent frustrations,” Adam Jonas of Morgan Stanley said in a note to investors. “We think they seriously want to be a part of the process.

An initial public offering of Ferrari will raise money later this year, which should give the company breathing room to gets its other brands in order.

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