Volkswagen Interested In Buying Fiat

Derek Kreindler
by Derek Kreindler

German business publication Manager Magazin is reporting that Volkswagen could be interested in acquiring Fiat. The Agnelli family, which controls the industrial conglomerate, is apparently looking to exit the volume car manufacturing business.

According to the article, the Agnelli family would retain Ferrari, while Volkswagen would benefit from Chrysler and its associated brands by giving it a foothold in America, where it has traditionally struggled. VW CEO Ferdinand Peich has long coveted Alfa Romeo, though it’s unclear what would happen to FCA’s other brands.

Any deal would be faced with a number of obstacles, including financial issues and inevitable consolidation of the respective brand portfolios. But the Agnelli family’s desire to exit the volume car manufacturing business is a wise one, given the constantly shaky market conditions in Europe, their exposure to the hardest hit regions of that continent and the massive overcapacity crisis currently plaguing its assembly plants. By contrast, Ferrari is a license to print money, generating enormous profits from its merchandising arm alone. Sergio Marchionne has long said that economies of scale above 6 million units are required to survive in this next era of the automotive business – this may be the most expedient way for him to achieve that goal.

Derek Kreindler
Derek Kreindler

More by Derek Kreindler

Comments
Join the conversation
6 of 155 comments
  • Lorenzo Lorenzo on Jul 18, 2014

    I believe there was a rumor that Exor, the Agnelli family holding company that owns 30% of Fiat, was looking to INCREASE its ownership of the combined FCA. Somehow, I think Ferdinand Piech is playing games with Sergio Marchionne. The FCA merger isn't complete yet, and would be a crowning glory for Sergio. Is Piech offering to buy the combined company, or just Fiat, to destroy the merger by buying out Sergio's bosses? Many of the latest generation of Agnellis have not only left Italy, but left Europe - the chairman of Exor and Fiat, John Elkann, was born, raised and lives in New York.

  • Jpolicke Jpolicke on Jul 18, 2014

    Aw, hell no. I bought Mopar because I was done with VW's love of complexity and contempt for reliability. When Fiat took over they upgraded all the atrocious cheap interiors that the previous German owner forced Chrysler to make. Given the way they de-contented and cheapened the MK6 Jetta over the MK5, I shudder to think what VW would return them to.

    • FreedMike FreedMike on Jul 18, 2014

      Chrysler would return to being a cash cow for Ze Master Race.

  • FreedMike FreedMike on Jul 18, 2014

    VW needs to build its business from within if it wants to grow here. It certainly has the resources. What it lacks is any kind of feel for the American market. Ford has been successful selling strongly European flavored product here - why can't VW?

  • Jpolicke Jpolicke on Jul 18, 2014

    VW is already "strongly European flavored". That's not the problem. VW needs to build a product that can generate brand loyalty; you can't grow in a market without repeat business and strong word-of-mouth positive buzz. For too many of their customers it's one and done. They also need to get over the mindset that Americans won't pay a dime extra for quality or content; there are too many alternatives that provide the quality feel without charging a premium. If VW can't produce a car that doesn't feel like a plastic tub inside profitably, then they'd be better off spending their money figuring out how other brands can.

    • Highdesertcat Highdesertcat on Jul 18, 2014

      We used to have a VW dealership in my area, near where I live. But they went out of business for exactly the reason you mentioned, no repeat business. Now the nearest dealership is in El Paso, TX, some 100 miles away. Who wants to drive that far in case of warranty service, if the car can be driven at all?

Next