Fiat-Chrysler Automobiles (FCA) is reportedly exploring the possibility of a merger again after unsuccessful attempts in the U.S. and China, with South Korean automotive giant Hyundai emerging as a potential partner, according to The Detroit Bureau citing South Korean media.
FCA CEO Sergio Marchionne has been on a global quest to find a buyer for the company. However, discussions with major players like Ford, General Motors, and Volkswagen have reportedly not materialized. A possible acquisition of Jeep by the Chinese firm Great Wall also fell through. With limited options in China, speculation has surfaced that Hyundai may be interested in partnering with FCA.
A merger between Hyundai and FCA would result in the world’s largest automobile manufacturer, with the two companies collectively selling approximately 11.5 million vehicles last year. For context, Volkswagen led the sales chart in 2016 with 10.3 million vehicles, followed closely by Toyota at 10.2 million and GM at 10 million.
The merger would strategically complement both companies’ vehicle offerings. Hyundai’s range predominantly includes small to mid-sized cars, and its limited selection of SUVs and absence of trucks has likely impacted its sales in the U.S. Conversely, FCA has largely shifted focus away from small and mid-sized cars in favor of strong sales from its Jeep and Dodge Ram models. A union of the two companies could effectively bridge the gaps in their respective product portfolios.
While previous attempts at merging with a Chinese firm faced hurdles, largely due to political factors, a partnership with a South Korean company appears to be more feasible.
An anonymous insider close to Trump suggested that all Hyundai CEO Chung Mong-koo needs to do is announce a significant investment in new automotive plants and thousands of jobs in key U.S. states such as West Virginia, Michigan, and Ohio to gain Trump’s favor, according to Asia Times.
Hyundai has not commented on the merger rumors, a stance that is typical as manufacturers rarely disclose future plans. However, Marchionne’s candidness regarding his desire for a merger is a notable exception in the industry. While he recently stated that he has paused merger talks for now, this potential partnership remains one to watch.
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