It’s no secret that Sergio Marchionne, CEO of Fiat Chrysler Automobiles, has sought to form partnerships with other automakers. Now, FCA Chairman John Elkann has renewed the push toward a merger, claiming the move will save the company close to $10 billion annually.
Citing data from an internal analysis, Elkann says big savings could be achieved by partnering with one of the “Big Guys,” which could mean General Motors, Toyota, or another large automaker. “But you need two to tango, and most of our competitors are busy with the great opportunities that technological disruption has to offer,” Elkann lamented in a letter to shareholders of Exor SpA, an investment company through which his family owns FCA.
Although automakers are pushing for autonomous and shared vehicles, Elkann says, traditional car sales will remain the bulk of the industry. Citing data from McKinsey’s recent “Automotive 2030 report,” he notes total car sales are expected to grow rapidly by 2030, and 90 percent of vehicles will still be sold to individual consumers. Basically, the auto industry isn’t going anywhere, making consolidation important. “Boring old car makers need to figure out how to make this profitable and guard against falling into the 1990 trap of ignoring that business while chasing profits in other parts of the value chain,” Elkann wrote.
Marchionne has long contended that automakers are independently spending too much on development, and consolidation is the key to the problem. Last year, it was reported Marchionne courted General Motors with a merger opportunity, although Mary Barra quickly turned down the bid. But just recently, FCA was said to be looking at players outside of the auto sector for an alliance.
Source: Bloomberg, Exor
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