Should Fiat and General Motors Merge?

Fiat_GM_merger

Is Chrysler ready for another merger?

The U.S. automaker recently wrapped up a takeover by Italian automaker Fiat and was subsequently renamed Fiat Chrysler Automobiles, or FCA.

Now FCA CEO Sergio Marchionne has his eyes on another merger:

A takeover of General Motors.

Acquiring one U.S. automaker evidently isn’t enough for the Italian businessman, because for the past few weeks Marchionne has been a champion of combining forces with GM. Obviously that’s a controversial plan, especially because GM CEO Mary Barra wants nothing to do with a merger and has said she’s committed to GM’s current plan.

Automotive News said,

Marchionne has repeatedly called for shrinking the number of players in the global auto industry to help sustain the heavy investments needed to meet demands for cleaner, safer vehicles.

Marchionne was said to be courting allies in the financial field to convince GM investors to support a merger.

A Business Insider article said,

While a hostile move for GM is seen as a long shot, Marchionne is trying to lobby investors to support his case that GM and FCA would be better off merged, the sources said.
The combined entity would be able to spread the high costs of developing vehicles, including greener and more high-tech cars, the sources said.

One of the biggest reasons for the merger would be to consolidate vehicles and eliminate duplication while pooling resources to speed up innovation in this ultra-competitive industry.

Of course, consolidated vehicles translate to consolidated jobs, which labor unions would throw a tantrum to protect.

Marchionne is a man who gets what he wants, and if he truly thinks a GM merger would be best, he’d force the issue.

There are many financial implications at play here, and the odds of FCA merging with GM are small, but it opens up an interesting conversation:

Is there room for three major automakers in this country, or should two of them merge into one?

-tgriffith

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