Is There a Merger on the Horizon?

01.17.17 - FCA CEO Sergio Marchionne

Two years ago FCA put together a proposal to merge with GM and create the largest automotive company in the world that would be American based. Their proposal was quickly rejected by GM and hasn’t really been a topic of discussion for the past couple years. With new changes in the leadership of the country this merger could be back on the table and could be a possibility, especially with the new position that FCA finds itself in financially. Will there be a merger between these two companies, let’s take a look and see what the ramifications could be.

Financially the merger would benefit FCA which is still struggling to get out of the hole they’ve been in since the bailout of 2009. GM on the other hand has been reporting record income and profits over the past few years and doesn’t seem to need any assistance from FCA. There is light on the horizon though, FCA reported earnings that were a full $1 billion more in 2016 than the previous year. This means they are also on the rise and could be working from the positive side of the ledger very soon.

When you consider the lineups of vehicles offered by these two companies there’s a ton of redundancy. There is the Ram truck lineup and the Silverado lineup as well as the sports cars such as the Challenger and the Camaro and SUVs that are similar between Chevrolet and Dodge. The Jeep brand would offer a difference in performance and ability compared to the SUV offered by GM currently. The technology that could be shared between these two companies could benefit both of them in the future and create lineups that are more advanced with the combination of the two companies.

Another benefit to both companies is the creation of the largest single automaker in the industry as an American based company. This would be something that would easily find favor with the current Presidential Administration as the two together could show that America is on the rise and a company based here is being created to lead the automotive industry. There would still be foreign operations in many areas of the world, but the base for the company would be right were we expect it to be in America, in Michigan where the “Big Three” were born and raised in this country.

Is this merger a realistic option? Probably not, so far GM hasn’t been listening to the suggestions of anyone at FCA and hasn’t made any moves toward a merger. As of right now this is nothing more than “bar talk” but some of the best ideas and most impressive companies started out as bar talk and grew from there. Marchionne hasn’t abandoned the idea that a GM-FCA merger could take place and create the most powerful and impressive company in the automotive industry. Let’s see what the future holds and whether or not these two companies eventually make this move.

Leave a Reply

Your email address will not be published. Required fields are marked *