Is the Volkswagen Group Eyeing Fiat Chrysler?

Simply speculation, but then.

Rumors are part and parcel of the auto industry. Just yesterday, Wards Auto suggested that the Volkswagen Group may be interested in acquiring Fiat Chrysler. Weve heard speculation in the past that Volkswagen is set on adding Alfa Romeo to its far-reaching brand portfolio, but Fiat has steadfastly insisted that Alfa is not for sale.

Volkswagen Group Collective

Buying Fiat Chrysler

The Alfa Romeo brand is hardly the crown jewel in the Fiat Chrysler brand arsenal. At least not right now. Ferrari and Maserati have the greater appeal, but those brands are exotic or niche players.

Alfa, on the other hand, has much potential. Indeed, as of this writing the boutique Italian brand is reentering the US market with the 4C sport coupe. Several more model releases are planned over the next 18 to 24 months, for what may turn out to be Fiat Chryslers most profitable make outside of Jeep and Ram.

Marchionne and Piech

Fiat Chrysler CEO Sergio Marchionne does not get along with Ferdinand Piech, head of the Volkswagen Group. The Fiat and Volkswagen brands are direct competitors, especially in Europe. Marchionne values his independence; Piech values Alfa Romeo and could make a play for it.

Despite Marchionne’s misgivings, it is the Fiat-founding Agnelli family that will have the ultimate say in what happens with Alfa Romeo, indeed the entire Fiat Chrysler collective. The Agnellis hold a 30 percent stake in Fiat and might be persuaded to sell their stake if the right offer were to come along. Wards notes that the Agnellis could keep Ferrari, selling the rest of the company to the Volkswagen Group.

Wards and others pointed to German magazine, Manager, which reported that the Agnelli family met with Piech to talk business. Fiat followed that news with a statement saying that it had not initiated any talks nor was it merging with Volkswagen. Fiat shares rose following the news; Volkswagen shares fell.

World’s Largest Automaker

Fiat Chrysler Automobiles and Volkswagen Group

Does FCA + VW = Volkswagen Group?

Gobbling up Fiat Chrysler would instantly make the Volkswagen Group the largest automaker in the world by far. Volkswagen has made known its quest for global leadership, a goal that intends to reach by 2018. Buying Fiat Chrysler would give the automaker a comfortable 3 million unit sales lead over Toyota.

An acquisition of Fiat Chrysler’s scope would not be an easy pill to swallow, given the size and breadth of the acquisition. And there are also distinct cultural differences that would be hard to deny, what were evident when DaimlerChrysler sought to unite German and American car manufacturers. That relationship ended in a very costly, bitter and highly-publicized divorce.

The newly independent Chrysler eventually went bankrupt, was then rescued by Sergio Marchionne-led Fiat, who had a vision for the distressed automaker. Today, the Chrysler Group is highly profitable with Jeep and Ram among its star brands.

Making it in America

For Volkswagen, Audi and Porsche are seeing much success in the US market. The eponymous Volkswagen brand, however, has struggled mightily stateside. In a market where industry sales are up year-to-date, Volkswagen sales are down. A Fiat Chrysler acquisition would give Volkswagen instant access to a market where success has alluded it. Volkswagen might fold Ram back into Dodge, eliminate Chrysler and keep Jeep. The Volkswagen brand would then be given room to grow, perhaps serving as a premium brand in the US just as Buick does for General Motors.

A Volkswagen Group bid for Alfa Romeo may include the whole package minus Ferrari. It could also mean that Marchionne would take an immediate retirement, finding it impossible to report to Piech or to anyone else for that matter.

There is another factor that could be driving Volkswagen to gobble up Fiat Chrysler. And that would be the global push towards consolidation that analysts have been forecasting for years. Ironically, one of those analysts is Sergio Marchionne who said himself in 2008 that there would be just “six survivors in the global volume sector” following consolidation as told to Automotive News Europe.

See AlsoDeal Done: Porsche Now Part of the VW Group

Author: Matthew Keegan
Matt Keegan has maintained his love for cars ever since his father taught him kicking tires can be one way to uncover a problem with a vehicle’s suspension system. He since moved on to learn a few things about coefficient of drag, G-forces, toe-heel shifting, and how to work the crazy infotainment system in some random weekly driver. Matt is a member of the Washington Automotive Press Association and is a contributor to various print and online media sources.

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