At the Geneva Motor Show this week, Fiat Chrysler Automobiles N.V. (NYSE: FCAU) CEO Sergio Marchionne reportedly said that he remains open to a potential merger. “I may shamelessly try knocking on the GM door again, or any door, if I thought it was a good thing to do for the business, without even blinking, I could,” he said. “[I]t will happen, whether it happens on my watch or it happens after my watch, sensible people will come to the conclusion that there is a better way to run this business.” Marchionne aims to step down as CEO in 2019.
Marchionne has long touted the need for consolidation in the global automotive industry. Back in 2015 he sent a letter to General Motors Co. (NYSE: GM) that urged its board to consider a marriage of the two automakers because a merger could lead to billions in cost savings. But GM CEO Mary Barra flatly turned down the proposal.
Nothing has changed, as a GM spokesperson said in response to the most recent Marchionne comments: “GM’s board examined this a long time ago and concluded it made no sense for the company’s customers, shareholders or employees. That is still true today.”
If not GM, could Volkswagen be next in line? “I have no doubt that at the relevant time VW may show up and have a chat,” said Marchionne.
Fiat Chrysler sales in the United States dropped 10% year over year in February, dragged down by sharp declines in sales of the Jeep Compass, Chrysler 200 and others. And in the highly regarded J.D. Power 2017 Vehicle Dependability Study, Fiat Chrysler brands took four of the bottom five spots, out of a total of 33 brands measured. No Fiat Chrysler brand scored above the industry average. A new study of dealer services puts its brands at the bottom as well.
Adding to the company’s woes, the U.S. Securities and Exchange Commission (SEC) and state attorneys general reportedly are now investigating the company’s diesel-powered vehicles. The investigations follow allegations by the U.S. Environmental Protection Agency (EPA) that the company included software in its diesel-powered Jeep and Ram models that allowed the vehicles to exceed pollution limits. It is a problem with which Volkswagen has some familiarly.