Detroit - Fiat Chrysler chief Sergio Marchionne is raising pressure on much larger rival General Motors for merger talks, saying in a Detroit interview the logic of the deal is “irrefutable.”
But Marchionne acknowledged in the interview with Automotive News, published late Sunday, that GM has brushed him off since he first floated the idea earlier this year.
It “would be unconscionable” for the world's number-three and number-seven automakers to not weigh a deal, Marchionne told Automotive News.
Having analysed the issues of combining the two companies' product lines, factories and workforces, Marchionne insisted the benefits would be immense for both.
“We're not talking about marginal improvement in margins,” he said, “we're talking about cataclysmic changes in performance, just huge.”
Marchionne, who engineered the Fiat takeover of Chrysler, completed last year, said FCA had other suitors, but the best combination would be with GM.
WHY WOULD IT MAKE SENSE?
“Look, the combined entity can make $30 billion (R398bn) a year in cash,” he said, by selling around 17 million vehicles a year.
But GM, which currently sells double the number of vehicles that Fiat Chrysler does, still “won't listen,” Marchionne said.
Earlier this year he sent an email to GM chief executive Mary Barra seeking discussions on a merger.
Barra, though, firmly said that the company will stick to its own internal development plans, rather than growing by acquisition.
And Automotive News quoted an unnamed high-ranking GM executive as saying, “Why should (GM) bail out FCA?”
Marchionne warned that investors would not look kindly on GM ignoring opportunities.
“The capital markets won't understand why you are rejecting the discussion,” he said.
SERGIO JUST WANTS A HUG
“You may reject the deal but you can't reject the discussion. If you're refusing to talk to me, and you have seen nothing, you either think you're above it all, or you think the capital markets are full of schmucks that owe you something.”
But Marchionne denied he was edging toward a hostile press for a deal.
“I can hug you nicely, I can hug you tightly, I can hug you like a bear, I can really hug you. Everything starts with physical contact. Then it can degrade, but it starts with physical contact.”
AFP