By on June 12, 2015

Toyota North America Groundbreaking Ceremony

When General Motors ultimately rebuffs FCA’s attempts to put a ring on it, Toyota or Ford could be the one true love, right? Not so fast.

Toyota North America CEO Jim Lentz told those attending a groundbreaking ceremony at the Toyota Technical Center in York Township, Mich. his employer had not been contacted by FCA CEO Sergio Marchionne about consolidation between the two, The Detroit News reports.

Had the suggestion been made, however, Lentz says it wouldn’t happen, as there would be “no advantage” for Toyota to consider such a move, citing Ford’s decision to avoid bankruptcy by selling off brands like Volvo and Land Rover to focus on a simpler portfolio:

To me, a large OEM today taking on Chrysler is contrary to what was very successful for Ford. FCA has a very strong Jeep brand, and especially today with fuel prices, it’s a great brand to have… but it really isn’t a fit for what we need at Toyota.

Speaking of Ford, CFO Bob Shanks said consolidation could occur at the supplier level, as well as partnerships with other automakers to share powertrain and transmission technology. As for Ford marrying FCA, however:

We’re not a suitor for FCA. We don’t see that type of opportunity as one that applies to us.

We have a lot of experience with mergers… We’re not babes in the woods. Based on that experience, for us that doesn’t seem to be where we’d want to go. We want to have a more forward-looking perspective in terms of what’s happening in the industry… It doesn’t seem to be that it would be doubling down on the past.

Kelley Blue Book senior analyst Karl Brauer had some encouraging news for Marchionne, stating FCA would its true love eventually, just not among the larger automakers, whom Brauer believes already have enough on their minds as it is without seeing a Ram 1500 in the parking lot blasting “Every Breath You Take” and “Wrapped Around Your Finger” from its custom bed with embedded nine-speaker audio system:

Poor Sergio; always a bridesmaid, never a bride.

[Photo credit: Toyota]

Get the latest TTAC e-Newsletter!

51 Comments on “Toyota, Ford Show No Interest In Heading Down The Aisle With FCA...”


  • avatar
    ajla

    It’s gonna be Volkswagen.

    • 0 avatar
      Steve Biro

      If that’s the case then I’d never buy one of their vehicles again. I still think Mazda, Suzuki or a Chinese company are more likely. But PSA could still happen.

    • 0 avatar
      JohnTaurus_3.0_AX4N

      I doubt that. VW would require total control, not a “merger of equals” as it were. VW and Fiat are not exactly best pals anyway.

      If it happens, itll be with some small automaker like Mazda, but the benifits to FCA would be limited mostly to economy cars. Dont get me wrong, their product line is sorely lacking decent (affordable) compact and subcompact models, but I still doubt very seriously that itll happen.

      If I were Sergio, Id pursue limited partnerships like what Ford and GM did to develop transmission(s) and what Mazda and Toyota are doing with small cars. A relationship like that would be benifical enough to justify consideration.

      The only wild card may be Indian and/or Chinese carmakers, whom are seeking growth anywhere they can find it. But, such a partnership wouldnt help much in the North American and European markets, at least in the short term.

      • 0 avatar

        I was thinking Mazda as well. Mazda has an extreme advantage in engineering lightweight platforms and small, competitive, fuel-efficient powertrains….something that FCA could definitely use once those stricter regulations kick in.

        Volkswagen? Not a chance. VW wouldn’t want to have anything to do with a merger.

        • 0 avatar
          Pch101

          The odds of a Mazda tie-up are even lower than one with VW.

          Mazda provides nothing to FCA that it needs. Marchionne wants to add scale and volume, but Mazda doesn’t have any. Marchionne wants to defend the European business against VW, but Mazda has virtually no presence in Europe. Mazda would be more of a liability than a benefit.

      • 0 avatar
        Higheriq

        Regarding Mazda as a potential merger, I doubt that possibility since I suspect Macaroni is looking for a larger partner to infuse a pile of money. Mazda doesn’t have a pile and is too small. I suspect it would need to be one of the larger players.

      • 0 avatar
        Jgwag1985

        I agree with most of your points, however if it were VW? They would want full control. They would axe Fiat, and develop Alfa Romeo.

    • 0 avatar
      Pch101

      VW would want to dominate the relationship — an acquisition, not a merger. (See Suzuki.)

      In any case, Marchionne wants to defend the company against VAG. PSA it is.

    • 0 avatar
      alexndr333

      This is an answer to a question only Sergio is asking. If we step back and look at the underlying problem – global over-capacity – then another question might be, ‘Should FIAT continue?’ Sergio doesn’t want to ask that question, but the rest of us needn’t be so limited in our thinking.

      • 0 avatar
        ClutchCarGo

        And this is at the heart of the responses Sergio is getting. Any CEO who agrees that there is an over-capacity problem is going to see the answer as FCA withering away, not bringing FCA into their camp.

    • 0 avatar
      derekson

      The only way VW would ever be involved would be possibly buying Jeep and/or RAM in liquidation. Piech’s VW loved acquiring brands to add new niche brands and was very good at developing diverse products with common components to serve those niches. I don’t know if the new VW management would have the same interest in adding more brands, but Jeep would be a huge get for VW both in terms of US market share and in adding an SUV brand which is one of the few brand types they utterly lack in their global portfolio.

      VW also has the experience in building/rebuilding/moving brands upmarket that could ostensibly see them taking Jeep onto the global stage as a competitor for Land Rover. In the last 30 years they’ve reinvented Audi, Seat, and Skoda as well as reinvigorating Bentley and reincarnating Bugatti.

  • avatar
    greaseyknight

    The only part of FCA that Toyota might be interested in would be the full sized truck lines. I think that’s the only part of the market that they aren’t doing well in. And that would be a really bad move to buy FCA just for a 13 year old platform.

    • 0 avatar
      danio3834

      The DS Ram is only in it’s 6th year. The Tundra is an older platform.

    • 0 avatar
      Lou_BC

      greaseyknight – I can’t see Toyota being remotely interested in Ram. When Toyota entered NASCAR their engineers grumbled that they were reverse engineering a dinosaur. Ram trucks are approaching the need for a new platform. Toyota already is at a point where they need to do more than “lipstick on a pig” with the Tundra. They don’t need the R&D headaches of having to upgrade two truck platforms.

      • 0 avatar
        tonycd

        Toyota is the wealthiest and most powerful automaker in the world. If they cared enough to make a truck just like Chevy’s, Ford’s or Ram’s, it’s well within their own capacity to tear down the competitor’s truck and knock it off bolt by bolt (exactly as they shaped their legendary ’92 Camry by knocking off the 4DSC Maxima, right down to the sheetmetal creases and seatback pleats), or throw a gigantic multi-billion-dollar NASA-level initiative at the challenge (exactly as they nearly exterminated the Germans with the original Lexus LS).

        Sergio is only embarrassing himself and driving his company’s price down by being so embarrassingly needy in public. I, for one, wouldn’t have known Fiatsler was in this much trouble if he wasn’t shouting it twice a week.

        OTOH, I wonder if Sergio’s real motive here has nothing to do with his company having an actual need to merge. Maybe he simply wants to personally cash out as a billionaire at the expense of his company. That’s not exactly a novel concept among the CEO class nowadays. I guess deLorenzo was right about him after all.

        • 0 avatar
          Lorenzo

          Very good point. Sergio earlier in 2012 said he would be out in five years, and now he’s moved it back. He has to leave the Agnelli family holding company Exor in good shape to get his reward, though.

          The thing is, while the Fiat conglomerate has been taken apart, piece by piece, with Exor holding interests in each, the Fiat auto group was left holding the debt, and the stated FCA debt of over $9 billion is net, offset by a large cash position.

          The company itself has old platforms and razor thin margins, barely enough to pay interest on the debt, in a good selling environment. Who knows what red ink would flow if interest rates go up or a recession hits.

          Sergio is trying to off-load the debt before the stucco hits the fan, and consolidating suppliers and platform development deals won’t help at all. With a market cap of $20 Billion, and an estimated $30 billion in gross debt to service, The individual parts are less valuable combined than the cost to acquire FCA.

          Only a giant could absorb that expense, and any parts of FCA they might want would be cheaper if/when FCA goes bankrupt and likely liquidates.

    • 0 avatar
      Pch101

      TMC is not one for global mergers and acquisitions. Ford just went through the process of jettisoning its acquisitions. It seems likely that neither one of them would be interested in an FCA pairing.

  • avatar
    01 Deville

    TTAC

    Please do a piece on the most suitable match for FCA?
    I would like to see the “strengths” and weaknesses of FCA compared with that of possible match.
    I am no industry insider but I feel that correct way of looking at it would be to see what FCA can bring to the table. FCA has somewhat outdated but extensive know how for small cars that would be very valuable for Geely and TATA in improving their home market and developing world small car offerings. Both companies can also benefit from FCA’s presence in NA and there could be some common development for Volvo/Jeep/Chrysler or JLR/Maserati/Alfa/Jeep/Chrysler.
    Case for Hyundai/Kia is a bit harder because the only thing FCA can offer them is SUV/Large Trucks/Large RWD brands and know how that they lack in US. In turn Hyundai/Kia can share their competitive FWD midsize platform for chrysler and may be alfa

    TATA can use Fiats R&D of outdated small cars to drastically improve India offerings, while some components can be shared between Jeep and LR, not to mention a combined development of parts for Maserati/Jag/Alfa/Chrysler

    Geely can also use

    • 0 avatar
      Pch101

      FCA has a large US presence and 6% market share in Europe, and is threatened by VW.

      PSA has no US presence and 11% market share in Europe, and is threatened by VW.

      VW challenges them both with its 24% market share in Europe and global strength (outside the US.)

      A relationship between Fiat and Peugeot would, at least on paper, provide benefit to both parties.

      • 0 avatar
        Lou_BC

        Pch101 – I do tend to agree with your assessment but would the French Government allow such a merger?

        • 0 avatar
          Pch101

          If there are at least some job protections and it looks more like a marriage than a conquest, then probably yes. (See Renault-Nissan.)

          • 0 avatar
            28-Cars-Later

            But would this be a marriage of two weak players which would drag each other down or two parties which could come out stronger as a result?

          • 0 avatar
            Lou_BC

            Pch101 – agreed.

          • 0 avatar
            Pch101

            If there is a culture clash, then it would make things worse. (M&A often fails because the dominant player — these things are rarely equal — doesn’t understand or get along with its new prize.)

            If there isn’t a culture clash, then it could provide them both with some modest help. It should save them both some money, since they could share R&D.

            But that doesn’t mean that the consumer will reward them for it otherwise. Taking on VW in Europe will require more than just cost reductions.

            Then again, there is no perfect solution. The fact that Germany remains Europe’s largest car market and has tax rules that indirectly favor its own automakers will provide the Germans with an inherent structural advantage for the foreseeable future, no matter what PSA or FCA do. A merger isn’t an awesome, perfect idea, but Marchionne and his Sino-French counterparts have good reasons to want it.

    • 0 avatar
      05lgt

      Aren’t the Korean’s viable for this? They’re somewhat SUV deficient, so Jeep would be nice for them. The shared development costs for hybrid, infotainment, transmission etc. could have some savings. PSA still sounds better, but are H/K in the mix too?

    • 0 avatar
      Luke42

      Pch101 makes a compelling argument.

      My outside of the box vote for a Nissan merger partner, though, is Mahindra & Mahindra.

      They started out building Jeep clones in India, and have tried to enter the US market with their trucks (and eventually their SUVs) more than once.

      Buying Jeep would further their brand and their global reach.

      In addition, I can imagine M&M being quite enthusiastic about selling JGCs and Wranglers to the rich people in India.

      The question is whether the rest of FCA bring too much baggage to make it worthwhile. I don’t know if M&M has the cash to make it happen, either.

  • avatar
    heavy handle

    In other words, here’s the answer they didn’t give to the question they weren’t asked.

    Is the auto industry just a continuation of high school (at least at the CEO level)? “I would never go out with that girl, even if she asked me!” Then you run into them 10 years later and they have three kids and a minivan.

  • avatar
    FormerFF

    From what I can tell FCA has three strengths: Jeep, Ram, and their Brazilian operation. They need to partner with someone who needs those strengths. It’s not anyone who currently is in North America.

    The other problem is that the products that Jeep and Ram make aren’t going to be big sellers outside of North America.

  • avatar
    Lou_BC

    The auto industry especially in Europe is struggling with overcapacity. I’ve read that it is 20-30%. The economic downturn has made it worse. VW is most likely their biggest headache despite the fact that VW has a marginal presence in the USA. IF FCA does not merge then they may very well collapse. Bits and pieces of it will survive. Unlike GM, I doubt anyone sees FCA as “too big to fail”. Bailouts of the auto industry have just delayed the inevitable. Marchionne wants FCA to survive and Toyota, Ford, GM, VAG etc. would be better off if they faded into oblivion. They know that and Marchionne knows that.

    • 0 avatar
      heavy handle

      It’s not that simple. FCA is currently a solid player showing decent growth in most markets. It’s not about to fail any time soon, barring another world financial crisis.

      I think the point FCA is trying to make is “why does the industry need to engineer/tool a Camry and an Accord and a 200 and a Malibu and a Passat and a Sonata and a Fusion and 10 more platforms when they are all basically the same?”
      The solution (from Marchionne’s point of view) is to only have two or three platforms. FCA isn’t in the top 3, so they need to merge.

      GM is the only merger candidate that’s already in the top 3, which is why he is courting them. They have a similar (Detroit) culture, and they are in trouble in every segment but pickups.

      If that doesn’t work, I guess he’ll try to merge three or more partners to get to the size that he thinks he needs.

      One can disagree with the idea that the world needs fewer, bigger, car companies (I certainly do) but, if consolidation was your goal, you would probably follow Marchionne’s game plan. he’s already successfully completed the first part, which was to merge his European/South American company with a large North American player.

      • 0 avatar
        Luke42

        If that’s the case, then Nissan would be the obvious choice. AFIAK, they don’t have a proliferation of platforms and brands, and FCA has Dane well with sharing engines and drivetrains.

        Nissan’s trucks and SUVs could be more competitive, and they have more hybrids and EVs than FCA does.

        Does etyone other then BTSR think plehform sharing between the Maxima and FCA’s big cars would be a bad thing? How about Jeep and the Nissan SUVs, just so long as Jeep took the lead? RAM and the Titan? Commercial vans? It all looks OK to me, with economies of scale to be had for everyone involved.

        • 0 avatar
          Pch101

          If Carlos Ghosn wanted to swallow Chrysler, then he would have done it in 2009.

          Based upon his earlier efforts, Ghosn would probably be interested in a partial joint venture (trucks from FCA in exchange for cars from Nissan), but I doubt that he is inclined to infuse capital into FCA or to do much to help FCA with its European problem.

  • avatar
    APaGttH

    Toyota nor Ford need anything FCA has.

    FCA is basically boned.

    We covered GM earlier this week.

    Ford and Toyota don’t need a thing they offer – besides Jeep. Toyota could use the V8 technology as their 4.7 and 5.7 are dated and thirsty — but that doesn’t justify eating the whole meal.

    VAG – will never happen.

    PSA – they are only in marginally better shape, particularly in Europe – and again, FCA offers nothing they need.

    The only answer that has any shred of logic to it is Hyundai/Kia or someone in China.

    • 0 avatar
      slance66

      Agreed. Can’t believe this was even worth asking Ford or Toyota about.

      Jeep has value. Ram has some value. Not sure if Kia/Hyundai want to go there or who would.

    • 0 avatar
      akatsuki

      Frankly why would Hyundai do it? They are doing great organically growing.

      Mazda is weak and seems like a better tie-up, especially since Sergio will want to stay in charge.

      • 0 avatar
        APaGttH

        Mazda can’t digest the meal. Nor could Fuji Heavy Industries. I don’t even know if Tata could digest the meal.

        Mazda would be in the position of a “reverse takeover,” with the FCA culture overwhelming their own – and everything would go down.

        Agreed Hyundai/Kia is doing a solid job on organic growth, but the RWD, V8, SUV, and minivan platform technology would fit better (no Hyundai minivan, aware of the Kia Sedona).

        Mazda is just too darn small. Anyone who buys it is going to have to weasel out of the European over capacity issue, or they will be equally boned.

        GM has at least cobbled together a shred of a reason for Opel to still exist, barely. The strategy of rebadging to Buicks is shaky at best in the US – but it’s better than Fiat or Alfa’s fortunes.

        • 0 avatar
          akatsuki

          I more figured FCA would buy Mazda to get their act together.

          FCA only valuable asset is Jeep.

          • 0 avatar
            APaGttH

            Well I would disagree their only valuable asset is Jeep. They have certain technologies that would be of value to companies beyond Ford, GM, and to a major extent Toyota.

            Their experience in RWD and V8 engines for starters, as well as other patents they hold. The minivan platform they have is nothing to sneeze at, nor the technology and patents around it.

            They have material value – the problem is the most likely buyers – have very similar institutional knowledge already. As I’ve noted before, I could see Toyota benefiting from the large V6, V8, and V10 technology FCA has. The Toyota V8 line up is falling pretty far behind their peers – the 4.7L in particular is under powered and very thirsty compared to the competition. The 5.7L is a better engine all around, but also on the thirsty side.

            Still – that isn’t enough for Toyota to inhale FCA.

  • avatar
    dwford

    No one has mentioned Mitsubishi yet. Mitsubishi has a terrible, almost nonexistent lineup in the US, and no platforms to make anything on. FCA could quickly provide them with the platforms. FCA is really looking to amortize its costs over more volume, a tie up with Mitsubishi could achieve that.

    • 0 avatar
      Pch101

      Mitsubishi does not support the economies of scale or the European defense strategy that are motivating Marchionne. Probably not a good candidate for a merger, in spite of its previous history with Chrysler.

  • avatar
    GeneralMalaise

    official egg-on-face watch starting soon…

  • avatar
    Rod Panhard

    Maybe a some of China’s manufacturers will consolidate and do a deal with Fiat. But that’s about it.

  • avatar
    DrGastro997

    The amount of desperation coming from FCA is scary. Perhaps there’ll be a resurrection of Diamond-Star if Mitsubishi takes the chance to relive it again.

  • avatar
    Jgwag1985

    Well GM almost merged it’s European operations with PSA, it was that close. I don’t think Sergio’s move is THAT desperate.

    • 0 avatar
      Lorenzo

      That was a wacko move by former CEO Akerson that cost GM money. It was only the the French Government stepping in that saved GM from a huge mistake.

Read all comments

Recent Comments

  • Jeff S: If the truck manufacturers’ could give a little more effort they could increase the size of the grills...
  • wjtinfwb: Yeah, the feds argument makes a lot of sense… Ford is hoarding chips because they are also hoarding...
  • Jeff S: Well there are many who do not want a turbocharged V6 engine especially if the vehicle is heavy and will be...
  • Jeff S: @mcs–I seriously doubt that most of us will need a breathalyzer put in our vehicles and the stop start...
  • The Comedian: 18” was the standard OEM wheel size for the 2016 Tahoe LS. My Tahoe came with 20” wheels as a factory...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber