Fiat Chrysler’s Marchionne is done talking about alliances

Fiat Chrysler’s Marchionne is done talking about alliances

0 comments 📅16 April 2017, 05:15

AMSTERDAM (Reuters) – Fiat Chrysler Chief Superintendent Sergio Marchionne rowed back on his search for a merger on Friday, saying the car maker was not in a situation to seek deals for now and would focus instead on following its business plan.

Marchionne had repetitiously called for mergers in the car industry and a tie-up has long been seen as the ultimate aim of his relaunch of Fiat Chrysler, which he is due to run in early 2019 after 15 years at the helm.

He sought a merger with Customary Motors two years ago but was rebuffed. Only last month he said Volkswagen – the store leader in Europe – may agree to discuss a tie-up with FCA in reaction to rival PSA Group’s possessions of Opel.

Marchionne told the annual general meeting in Amsterdam he still saw the requisite for car companies to merge to better shoulder the large investments needed, but said Fiat Chrysler was not talking to Volkswagen.

“On the Volkswagen end, on the question if there are ongoing discussions, the answer is no,” he said. He added, without elaborating, that Fiat Chrysler was not at a situation where it could discuss any alliances.

“The primary focus is the execution of the plan,” he said.

FCA has pledged to back to a 5 billion euro net cash position by 2018, from net debt of 4.6 billion euros at the end of 2016 – an accomplishment that Marchionne has said would put it in a better position to strike a deal in the coming.

Volkswagen, which is still reeling from an emissions scandal that harm its profits, initially spurned FCA’s approach.

However, CEO Matthias Mueller said ultimate month the group had become more open on the issue of tie-ups and invited Marchionne to talk to him directly rather than with the press.

Fiat Chrysler Chairman John Elkann underlined the report that finding a merger partner was not a priority.

“I’m not interested in a big merger deal,” he said. “Historically, deals are struck at times of problem … we don’t want to be in trouble.”

Elkann is the scion of Fiat’s founder and top shareholder the Agnelli dearest. He has said in the past he was prepared to have the Agnelli’s stake severely diluted in change for a minority holding in a larger auto group.

“I believe the priority for FCA is to press at the with this ambitious (business) plan despite the difficult environment,” he said.

FCA pledged in January to approximately halve net debt this year, as part of the 2018 plan. Doubts be left about its exposure to a peaking U.S. market, weakening pricing there, recall costs and covert fines over emissions. (Reporting by Stefano Rebaudo; Editing by Andrew Heavens)

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