FCA could be in real trouble.
The company that used to be known as Chrysler, until acquired by Fiat after bankruptcy, finds itself with an unclear future.
Last year Fiat CEO Sergio Marchionne desperately tried to force a merger with General Motors. GM, of course, wanted nothing to do it and the effort fizzled out. Now FCA seems to be on the lookout again, with a list of its top three prospects for a merger that, it hopes, can help it keep relevant into the 2020s and beyond.
One of those three, though, has already responded with a big fat “No.”
FCA does a few things very well, including full-size trucks and crossover SUVs. Its Ram and Jeep brands continue to show healthy sales. In fact, the company will discontinue a couple of Chrysler and Dodge sedans to make room for more truck and SUV production because they are so much more profitable.
There’s danger in that reasoning, though. By chasing profits and ignoring the business side of where the car industry is heading, FCA could find itself in a future where it missed out on high-tech automobile technology like alternative fuels, connected cars, and autonomous vehicles.
FCA isn’t currently in the business of disrupting the car industry. Instead, it’s very much into maintaining the status quo of the auto industry. Top FCA executives believe a partnership with a large automaker would be mutually beneficial:
Chairman John Elkann renewed a push Thursday to combine Fiat Chrysler with one of the industry’s “big guys,” saying savings could top $10 billion a year. Even with developments like car sharing and self-driving vehicles, Fiat Chrysler’s counterparts should look at a merger’s benefits because the bulk of their business in coming decades will remain selling cars to individuals
Ford, Toyota, and Volkswagen are the companies FCA has targeted for a potential merger, though Ford has made its intentions pretty clear:
As we consistently have said, Ford has no plan or interest other than to continue to accelerate our One Ford plan, deliver product excellence and drive innovation in every part of our business.
Toyota and Volkswagen have yet to publicly comment on the possibility, but I’d be shocked if either of them chooses to get into a relationship with the struggling automaker. FCA simply doesn’t have much to bring to the table.
FCA needs to secure a partnership with a willing mate if it is to thrive in the future. If that doesn’t happen, the company could fade into the history books when automotive tastes begin to shift away from full-size trucks. Of course, there’s another possibility: FCA could wind up in the hands of a Chinese automaker looking for expansion into the U.S.
FCA desperately wants to merge with another automaker. Will it be Toyota, Volkswagen, or a Chinese automaker?