Fiat Chrysler Automobiles chief executive officer Sergio Marchionne has been recently rumored to have sent an email to its rival at GM – Mary Barra – calling for a merger, only to be dismissed swiftly.
Marchionne, known for his direct manner of calling things, has been preaching for auto industry consolidation for years, but only recently made it an active point on his work agenda – claiming the current run of carmakers won’t be able to afford all the fuel economy, safety technologies and other features that car need on the long run. He is a former accountant and lawyer, so his homework is done well – the global players spent around $134 billion on capex and research & development last year alone and their average return on the invested capital – of just 7.8 percent – was one of the smallest among industries. But most of his competitors show little to no interest in his words – as sales are rising both in the United States and in Europe.
But, when it comes to plugging gaps and addressing weaknesses, there’s only one major player that would be fitting for a FCA marriage – Volkswagen AG. The German group is the second largest automaker in the world, only behind Japan’s Toyota and the biggest player in Europe. VW is still unable to address its US woes where it lacks the strength of FCA’s sport utility and truck brands. Meanwhile, the European-US powerhouse, the world’s seventh largest automaker, has a major slip – China – the planet’s single largest auto market. There, Volkswagen is the best selling foreign automaker.