Sergio Marchionne always had been a proponent of the “the world only has room for six large global automakers” theory. Fiat and Chrysler isn’t necessarily a marriage between two robust partners. Especially in the Asian growth markets, both are weak. According to Italy’s Corriere Della Sera, Marchionne is rekindling a years-old flirt with France’s PSA Peugeot Citroen. Of course, none of the presumably dating companies will confirm the rumor. However, the rumor was started by Sergio Marchionne himself, in Detroit.
On Monday, Marchionne, adorned with sweater, knitted scarf and a hedgehog-like three-day beard, told Reuters that
“he would be willing, in principle, to be part of a consolidation that would create another car company in Europe rivaling Volkswagen AG in size.
“If you take two of the European players and put them together, you’re going to get the right answer,” Marchionne said.”
Rivaling Volkswagen AG in size in Europe is a tall order. Last we looked, Volkswagen AG had 23 percent of the European market, followed by the PSA group holding 13 percent. And this is either how the rumor started, or it is a well-placed scent laid by Marchionne. The Fiat Group has 7 percent of the European market. If you add both together, you are approaching VW territory.
No other group would bring the right answer. Renault has its own alliance. GM will stay as far away as possible from Fiat. Ford – forget it. We are already in mathematically rough territory: An unlikely merger of Ford and Fiat for instance would only produce a total of 15 percent market share, not even getting close to VW. The only suitor immediately fitting Marchionne’s formula is PSA.
Rumors of PSA and Fiat playing footsie are nearly as old as TTAC. In 2008, they were reported to be engaged in heavy petting. In the following year, they were seen holding hands again. Then, Chrysler commanded Marchionne’s full attention. With Chrysler secured, there is room for new engagements. Globally, PSA would be a decent fit: The company has no presence in the U.S. It also has two joint ventures in China, both with heavy hitters: One with Changan, the other with Dongfeng.
Dongfeng would be a delicate situation: It is also a prized JV with Nissan. Carlos Ghosn doesn’t think too highly of Marchionne.