FCA-London-Web Numerous American media outlets have picked up on Manager Magazin’s claim that Volkswagen’s chairman, Ferdinand Piech, has spoken with members of the Agnelli family about combining the two companies, presumably with the larger Volkswagen firmly in charge. Mr. Piech is part of the family that controls Volkswagen, while Mr. Agnelli is part of the family that controls Fiat (through ownership of 30% of the shares). One version of the story has just the Fiat brand moving to Volkswagen, as FCA wants to focus on upscale vehicles. Fiat issued a press relies flatly denying the claim, but that did not stop its shares from rising and Volkswagen’s from falling. At least one analyst told Bloomberg that the rumor was “realistic.” Fiat is currently trying to establish itself more firmly as a worldwide company, building up its distribution channels and product lines, particularly in the Asia/Pacific region, and using the Jeep, Fiat, and Maserati brands to penetrate into worldwide markets, while working on rebuilding Alfa Romeo. Acquiring Chrysler provided entry into North America and access to the Dodge Journey, along with the financial ability to reboot Alfa. Fiat would likely be a good catch for Volkswagen, which is seeking to become the world’s largest automaker despite knowing what happened to the last two holders of that title, General Motors and Toyota. Chrysler is firmly established in North America, and while Fiat and Volkswagen have almost complete product overlap, there are regions where Fiat is doing well and Volkswagen is not. On the downside, the corporate cultures are very different, and the Agnellis are unlikely to want to be remembered for massive layoffs in Italy, and the likely loss of most of the Italian motor industry. If, as some claim, the deal is just to acquire Fiat, new questions arise, such as whether this would include Fiat Powertrain with its very highly regarded Multijet diesel engines, and how the rest of the company would fare without its largest European mass-market brand. Maserati, Ferrari, Alfa Romeo, and Chrysler could likely “go it alone” without Fiat; there’s not much volume in common between Fiat and the other brands, with Alfa Romeo expected to be coupled with Dodge and Maserati, and no engines in common with Fiat. Chrysler makes little use of Fiat engines, and could easily stop using the 1.4 turbo and 3-liter diesel, or purchase them from Volkswagen. Still, the same objections remain — while Fiat’s “larger cars” could stand on their own without Fiat itself, it would mean abandoning most of the Italian auto industry, a great loss of face, and having to rename the company once again. While a VW-Fiat alliance or merger is unlikely at this time, it’s not impossible that Mr. Piech and Mr. Agnelli may have met, perhaps to discuss mutual concerns over regulatory or financial issues.
Posted on: Fri, 18 Jul 2014 16:37:48 +0000
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