Speculating about the potential buyers of FCA brands

FILE PHOTO: A screen displays the ticker information for Fiat Chrysler Automobiles NV at the post where it's traded on the floorof the NYSESo many things have been said about a deal between FCA and a potential buyer. The rumors grab more attention than the company’s financial results, but there’s very few evidence of a real agreement. Sergio Marchionne has constantly said FCA can make by its own, but at the same time he doesn’t hide his desire of finding the suitable husband to its beloved company. He’ll be out of office soon, and this is perhaps his major challenge now.

Marchionne would love to sell the company as a whole to a powerful car maker. The 9 main brands of the group sell around 5 million units per year with Jeep and Fiat counting for 63% of the total. An eventual partnership would increase this volume and get close to the big players like Renault-Nissan or Volkswagen Group. Despite the rumors of negotiations with Chinese Great Wall and Hyundai-Kia, the truth is that nothing has happened yet and its rivals continue to run faster.

Speculation 1

Jeep-Ram-Chrysler-Dodge

What about splitting the group into three groups? Jeep is the most attractive brand in FCA world, but it loses value when living with Fiat under the same roof. The SUV brand would become more appealing to investors if it were spun off, just as it happened to Ferrari. My own speculation takes me to think that a big Chinese automaker like Zhejiang Geely Holding Group could be the most probable candidate for the purchase of Jeep, along with Ram, Dodge and Chrysler. Why?

Speculation 2Because the Chinese car makers understand that the best way to expand their operations outside China is not through their own low-reputation cars, but through acquisitions, mergers or collaborations with Western makers. Geely is China’s most international automaker due to its increasing importance in the European car market through Volvo cars, London Taxi Corporation and Daimler. The next step in its global expansion should focus on USA, and the former Chrysler group could be the perfect match.

Speculation 3There is also one more reason. Despite its strong results in 2017, Geely is still behind the leaders in the Chinese SUV segment. Last year they sold around 685.000 SUVs in China, up by 49%, and counting for 6,4% of the segment total. It was the fourth largest SUV maker behind GM, Great Wall and VW Group, with the American automaker leading the ranking with more than 940.000 units. If Geely wants to outperform its Western rivals and Great Wall, it needs more a wider range of brands. Jeep could solve this requirement by adding more than 200.000 units that it currently sells.

Fiat

We won’t explain again the reasons why Fiat is not attractive anymore. The brand’s big problems don’t mean there aren’t solutions or potential buyers. And this is where I speculate the most, as there is no evidence or even indications that this could happen. However, Fiat could be useful for an automaker wishing to compete against Mini. And that’s the case of Daimler, which could find in the icon Fiat cars the best way to add more volume to its profitable operations.

Speculation 4Daimler doesn’t stop selling more cars and making more profits. Last year it posted records in both, so it wouldn’t make sense to look for a troubled brand like Fiat. But Daimler could also replicate the case of success of Mini, by buying Fiat brand and its iconic nameplates. Then it would transfer its know-how and premium touch to position Fiat as a semi-premium brand focused on chic smart mobility. There would be a massive change from how Fiat is conceived right now and how it would be under Daimler management. This means no models like the Panda, 500L, Tipo.

An acquisition of Fiat from Daimler is not likely to happen. Even if it makes sense from the point of view of the new positioning of Fiat, there are many obstacles. One of them is what to do with Fiat factories in Serbia, Turkey and Poland. Italy, as the UK, would become the hub for the iconic brand of Daimler, but its factories in the other countries wouldn’t have any role. Brazilian operations would help Daimler to expand its presence there.

Speculation 5

Alfa Romeo & Maserati

These two brands would be next in line for a possible spin-off. Marchionne keeps saying that this will be only possible after both brands become profitable again, but the rumors about it grow every time there’s a potential sale. In other words, Alfa Romeo and Maserati are likely to be the next brands to become independent as Ferarri. However, it will take time and money.

Alfa and Maserati are expected to remain under the Agnelli’s control, at least for some years. This way the some Italian factories like Casino, Grugliasco and Modena could continue operating. This situation could continue until both brands are attractive enough to be sold to a Chinese automaker wishing to compete in the profitable premium segment.

Advertisements

5 responses to “Speculating about the potential buyers of FCA brands

  1. If FCA sells it’s cars to a Chinese company I would sell my Maserati,and my Fiat,and won’t but Alfa even though I just love all these Italian makes. I would have to go to Subaru or something else.

    • I do not think they will sell anything to anyone. It’s been years now they say so and nothing ever happened. People love to speculate, but reality is a different thing. Too many Nostradamus around 🙂

      • Can’t agree with you on a 100% .
        Did anyone see GM selling Opel to PSA ? Not really .
        There is a lot of other examples too . It’s 2018 . Everything is global and whatever makes financial sense to the investors will happen . I personally hope FCA will stay independent but we will see . They should pursue long term tighter connections with Mazda or Suzuki ( without a merger ), but again I am sure there is enough smart people in FCA and they probably tried , but maybe didn’t work or something from economical point of view

  2. I love your analysis , but very unrealistic .
    Even though you saying ” speculating” , it seems more to me like fantasy wishes rather than a real plan .
    First the American brands being bought from chinese will be hard to happen .
    Second Daimler haven’t acquired or tried to any major brands in a while and actually sold all their stakes in other manufactures so I don’t know what exactly makes you think that can even happen .
    The realistic one is only Alfa-Maserati getting spun off and eventually sold to another company .
    You know what they should do ?
    Eliminate completely Lancia and Chrysler or Dodge ( whichever makes more sense financially ) and focus on rebuilding the rest . Way too many brands under the same umbrella . It’s silly and they starve them for models . You can’t expect to sell old models and improve sales numbers . It’s very simple

  3. Would be a shame, as I like keeping National brand together.
    I like idea of merging with a Asian company, so completing a full set of American, European and Asian brands.
    The only change that I would have, is moving Alfa to Ferrari.
    Chrysler and Dodge could become the Buick/Chevrolet competitors, including SUV range.
    Maybe Nanjing might want whole company as joint venture.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s