CEO of Fiat Chrysler (FCA),Sergio Marchionne, has for some time, been promoting the need for the world’s car industry to combine forces in order to cut costs and reduce capital outflows. However, his words of advice have largely been ignored by his company’s competitors in the United States and across Europe. But there’s one country where he seems to have found a sympathetic ear, and that’s China.
China’s involvement in the global motor industry continues to grow. Geely Motors owns Volvo and Britain’s London Taxi International (LTI), recently rebranded as LEVC, and Chinese interests have taken a substantial stake in French group PSA, makers of Peugeot, Citroen and DS Cars, and most recently, Vauxhall and Opel products.
On Monday 15th August, FCA’s stock rose sharply following a report from Automotive News stating that the Italian-American combine had rejected a takeover approach from an unnamed Chinese suitor. The fact that FCA is controlled by the Agnelli family is likely to have been a factor in the failure of the takeover attempt, that and the asking price.
Had this bid proved successful, it would have marked the beginning of the world’s first fully-global automotive manufacturer with extensive operations in China, the US and Europe. FCA offers a range of SUVs, mainly through the Jeep brand. With China being the largest market for SUV-type vehicles, this would likely to have been financially beneficial to FCA.
While Chinese-made vehicles have improved in recent years they’re still some way behind those made in Europe, Japan and America in terms of quality and safety. The Chinese haven’t been very effective in building global automotive brands and their export markets have been slow to develop, so far.
While Beijing is cracking down in foreign acquisitions the modernisation of strategic industries, such as the automotive sector, still gains support from Government. Several Chinese manufacturers may have been in a position to buy FCA, at least in part, with SAIC, Dongfeng Motor, Guangzhou Automobile and Great Wall being among them.
One dark cloud hanging over any potential deal is President Trump’s instructions to the U.S. Trade Representative to carry out research into China’s trade policies on intellectual property.
Trump and his supporters’ economic nationalism might also have put paid to any notion of famous American brands such as Chrysler, Jeep, Dodge and Ram being based anywhere but within the United States.
