Fiat Chrysler an enticing takeover target for China
Fiat Chrysler would not be the first major automaker to come under Chinese control to look for ways to break into that huge market.
Detroit – China's Great Wall Motor signalled yesterday its intention to make an ambitious offer to buy all or part of Italian-American car maker Fiat Chrysler Automobiles.
A deal would be a major coup for the Chinese auto industry but it may cause political waves in the United States, where President Donald Trump has railed against his country's trade imbalance with the Asian country.
“There is an intention to make the purchase,” the spokeswoman told AFP, though she declined to say if the possible deal would be for the entire auto giant or just one of its brands.
Italian-American car maker Fiat Chrysler Automobiles would be an alluring takeover target for the Chinese company, instantly putting it at the top rung of the US auto industry, analysts say.
With sales of its models ebbing in the United States, a Chinese acquisition could offer a lifeline to Fiat Chrysler, in particular for its Chrysler, Dodge and Fiat brands.
A sale also could provide the means for the company to boost its research and development.
“It won't be a merger. It will be an outright sale,” said Joseph Phillippi, president of Auto Trends Consulting.
He notes that Fiat Chrysler produces the Jeep and Ram brands which not only are popular in the United States but also in China and elsewhere.
“FCA would get access to small cars that would be made in China but could really be something pretty nifty with FCA's design help.”
Market share
Fiat Chrysler would not be the first major automaker to come under Chinese control to look for ways to break into that huge market.
Sweden's Volvo was acquired by China's Geely in 2010 and has seen strong sales growth since, with the Chinese market accounting for 20%.
US auto giant General Motors now sells more cars in China than in the United States, with 287 500 sold in China in July compared to 226 100 in the US market.
Before its 2009 sale to Fiat in a bankruptcy, Chrysler was one of the first US automakers to plant its flag in China at the start of the 1980s.
Fiat Chrysler sold 110 000 locally-built cars in China in the first half of the year, in particular thanks to rising sales of Jeeps built by a joint venture with GAC Group.
But it has since been overtaken by Ford and by GM, which now imports Chinese-made Buicks into the United States.
Detroit
Chinese automakers are no strangers to Detroit, the capital of the US auto industry.
Shanghai Automotive Industry Corp, for example, a major Chinese producer and partner of GM, maintains a sizeable corporate presence in the Michigan city.
Chinese parts manufacturer YFS Automotive Systems, which produces fuel tanks, has announced plans to build a plant in the area.
FCA, which is controlled by Italy's Agnelli family, currently sells 4.5 million cars worldwide under its brands: Fiat, Chrysler, Jeep, Dodge, RAM, Alfa Romeo and Maserati.
FCA CEO Sergio Marchionne spun off Ferrari in 2015 and could do likewise with Alfa Romeo and Maserati.
So selling Fiat, Dodge, Chrysler, Jeep and Ram to a Chinese investor could fit in with that corporate strategy.
And Italian newspaper Corriere della Sera said recently the Chinese suitors “have already shown that they are not invaders (for now), and that they can respect the history, culture and human resources of the businesses they take over.”
But President Donald Trump could potentially be an obstacle to any deal. He has angrily denounced the US-China trade imbalance and could seek to prevent a flagship US brand from coming under Chinese control. – Nampa/AFP
A deal would be a major coup for the Chinese auto industry but it may cause political waves in the United States, where President Donald Trump has railed against his country's trade imbalance with the Asian country.
“There is an intention to make the purchase,” the spokeswoman told AFP, though she declined to say if the possible deal would be for the entire auto giant or just one of its brands.
Italian-American car maker Fiat Chrysler Automobiles would be an alluring takeover target for the Chinese company, instantly putting it at the top rung of the US auto industry, analysts say.
With sales of its models ebbing in the United States, a Chinese acquisition could offer a lifeline to Fiat Chrysler, in particular for its Chrysler, Dodge and Fiat brands.
A sale also could provide the means for the company to boost its research and development.
“It won't be a merger. It will be an outright sale,” said Joseph Phillippi, president of Auto Trends Consulting.
He notes that Fiat Chrysler produces the Jeep and Ram brands which not only are popular in the United States but also in China and elsewhere.
“FCA would get access to small cars that would be made in China but could really be something pretty nifty with FCA's design help.”
Market share
Fiat Chrysler would not be the first major automaker to come under Chinese control to look for ways to break into that huge market.
Sweden's Volvo was acquired by China's Geely in 2010 and has seen strong sales growth since, with the Chinese market accounting for 20%.
US auto giant General Motors now sells more cars in China than in the United States, with 287 500 sold in China in July compared to 226 100 in the US market.
Before its 2009 sale to Fiat in a bankruptcy, Chrysler was one of the first US automakers to plant its flag in China at the start of the 1980s.
Fiat Chrysler sold 110 000 locally-built cars in China in the first half of the year, in particular thanks to rising sales of Jeeps built by a joint venture with GAC Group.
But it has since been overtaken by Ford and by GM, which now imports Chinese-made Buicks into the United States.
Detroit
Chinese automakers are no strangers to Detroit, the capital of the US auto industry.
Shanghai Automotive Industry Corp, for example, a major Chinese producer and partner of GM, maintains a sizeable corporate presence in the Michigan city.
Chinese parts manufacturer YFS Automotive Systems, which produces fuel tanks, has announced plans to build a plant in the area.
FCA, which is controlled by Italy's Agnelli family, currently sells 4.5 million cars worldwide under its brands: Fiat, Chrysler, Jeep, Dodge, RAM, Alfa Romeo and Maserati.
FCA CEO Sergio Marchionne spun off Ferrari in 2015 and could do likewise with Alfa Romeo and Maserati.
So selling Fiat, Dodge, Chrysler, Jeep and Ram to a Chinese investor could fit in with that corporate strategy.
And Italian newspaper Corriere della Sera said recently the Chinese suitors “have already shown that they are not invaders (for now), and that they can respect the history, culture and human resources of the businesses they take over.”
But President Donald Trump could potentially be an obstacle to any deal. He has angrily denounced the US-China trade imbalance and could seek to prevent a flagship US brand from coming under Chinese control. – Nampa/AFP
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