FCA CEO Sergio Marchionne says a General Motors merger still makes sense

CEO Sergio Marchionne

Fiat Chrysler Automobiles (FCA) CEO Sergio Marchionne is still interested in a merger with General Motors, stating on last week that it still made sense after General Motors sold its European operations to PSA Group.

Marchionne has long promoted more vehicle market mergers to share the prohibitive expenses of making cleaner and more technically advanced cars, however GM has strongly rebuffed his previous approaches.

“I never ever close any doors. I may shamelessly try and knock once again … on the GM door or any door if I believed it was a good thing for the business. Definitely, without even blinking,” Marchionne informed reporters at the Geneva Motor Show.

“The desirability of GM as a prospective merger candidate remains untouched.”

FCA’s share cost shot up last month on the day news of the conversation between GM and PSA first emerged, with some experts recommending GM could be tempted to consequently regain a grip in Europe through FCA, which is more successful than the Opel organisation that has been losing cash for several years.

Others has however stated GM would have even less interest than before to integrate with its smaller and heavily-indebted competitor, which manages just 7 percent of the European market and whose operating revenue margin of 2.5 percent there lags competitors.

“GM will de-consolidate a loss-making asset and enhance return on capital, something that investors have blamed the company for in previous years, making a deal with FCA less most likely,” stated Angelo Meda, head of equities at Banor SIM, including that FCA’s alternatives were diminishing.

“Lagging behind peers on hybrid/electric automobiles, without a deal in the next two to three years the primary danger is a step up in investments, which would dampen the currently weak, compared with peers, cash generation.”

Marchionne stated the PSA-Opel deal would decrease potential synergies FCA-GM might reap from a tie-up by about 15 percent, however the potential advantages were still worth pursuing.

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