The New York Times reported that Fiat Chrysler Automobiles CEO Sergio Marchionne had sent an e-mail to GM CEO Mary Barra in March suggesting that the two companies combine.
Marchionne did not confirm that he sent the e-mail, saying that he writes “lots of e-mails.”
However, the chairman of FCA, John Elkann, confirmed that Marchionne had sent an e-mail to General Motors about a possible tie-up.
Elkann said discussions had taken place with other players as well.
“It (the e-mail) was not the only e-mail, it was not the only conversation,” Elkann told reporters, referring to discussions with industry players about possible tie-ups.
Marchionne publicly made a call earlier this year for shrinking the number of players in the global auto industry to sustain the heavy capital investment needed to meet demands for cleaner, safer vehicles.
His e-mail to Barra suggested a merged between GM and Fiat Chrysler would save billions of dollars in costs and create an automotive giant.
The idea of a merger did not interest Barra or any other GM executives and for good reasons.
Fiat Chrysler, the world’s seventh-largest carmaker, may have trouble finding any partner let alone GM.
Its debts rank among the highest in the industry; it barely breaks even in Europe and it is expected to burn cash for years.
If a company wants to entice partners into a merger, it should first put its own house in order.
FCA needs to restructure its operations in order to regain profit, trim production and control costs.
It can resort to the experience of Carlos Ghosn in Nissan when he took over a nearly bankrupt company in 1999 and turned it into one of the strongest contenders in the industry.
The day a merger of FCA with another company would work is the day when Marchionne would hear a knock on his door from suitable suitors.
Flogging FCA in its current state is an offer most companies would refuse — they have enough problems of their own.
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*Adel Murad is a senior motoring and business journalist, based in London.
Email: [email protected]
