Ford, FCA, and Merger Talk at the Dinner Table

by Steph Willems

Published: June 11th, 2019

ford fca and merger talk at the dinner table

Last week’s sinking of the proposed merger between Fiat Chrysler Automobiles and French automaker Renault may not be the final word on that story, but a tie-up between FCA and a rival domestic automaker is definitely not on the table.

It once was, in an informal sort of way. And that table was the dinner table — one populated by Ford chairman Bill Ford and late FCA CEO Sergio Marchionne.

With the FCA-Renault drama serving as a backdrop, Bill Ford spoke to Automotive News about the dance that took place between the two automakers.

“Sergio [Marchionne] and I had a number of dinners together talking about this and whether Ford and FCA would be a good fit,” Ford said at the EcoMotion “smart mobility” conference in Tel Aviv, Israel.

Ford didn’t say when the dinners took place, but it sounds like it wasn’t all that long before Marchionne’s death last summer. A few years ago, Marchionne attempted to find merger partners in General Motors and Volkswagen, to no avail. Earlier this year, Ford forged an allianc e with VW.

“The timing certainly wasn’t ideal,” Ford continued. “We had our own issues and challenges ahead of us. I felt like it wasn’t going to help us solve those problems. If anything, it might have slowed us down.”

While the speculative Ford-FCA merger was ultimately deemed impractical, Ford clearly isn’t shy about pursuing partnerships of its own. Teaming up on new technologies is the hottest trend in autodom right now. So much so, that Daimler and fierce historical rival BMW are now going halfsies on mobility.

“I think you’re going to see a lot more of what we did with VW,” Ford said. “There will be winners and losers in our business like you’ve never seen before. I think you will see companies looking for scale, because some technologies need to scale to be effective.”

[Image: Ford]

#Fca #FiatChryslerAutomobiles #Ford #Mergers #Partnerships

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6 of 14 comments

Steve203 on Jun 11, 2019

Marchionne must have really loved to waste people's time. Any combination of FCA and anyone with more than a nominal market share in the US would not pass anti-trust scrutiny. Any combination of FCA and anyone with a double digit market share in Europe may not pass the EU equivalent of anti-trust scrutiny. So, who does that eliminate: GM, Ford, VW, Toyota, Nissan, Honda. Daimler is small enough, but already was burned by Chrysler. Peugeot could have been a possibility. before they bought Opel, but now is probably too big. Toyota owns pieces of Subaru and Mazda, so those two are off the table. Renault would have been small enough, if not hooked up with Nissan. Who is left? BMW? Hyundai? With the trade war going on, the chances of the Chinese being allowed to buy FCA are a bit slim. Tata? Mahindra? The Indians are probably too small. The door might have closed on FCA merging with anyone. That would explain the desperation play to try and break the Renault/Nissan alliance so Renault, alone, would be small enough to take over. Then they could bleed Renault, the way Fiat, Lancia, Dodge and Chrysler have been bled and starved of new product, to support Ram, Jeep, Alfa and Maserati.

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- Ect on Jun 11, 2019
  
  Steve, you seem preoccupied with the notion that any FCA merger would be opposed by DoJ, without offering any evidence of why this should be so. Having lost on AT&T/Time Warner, and being ready to pass TMobile/Sprint (which would be far more anti-competitive than any automotive merger could be) there is no basis for DoJ to suddenly rise up and oppose FCA/anybody. Ain't gonna happen - and I say this as a corporate lawyer who has dealt with antitrust issues for 40+ years
  
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- Steve203 on Jun 11, 2019
  
  @ect "Having lost on AT&T/Time Warner," Companies in different industries: one content, one delivery. Not fundamentally different from Comcast/NBC/Universal. "TMobile/Sprint" T-Mobile and Sprint combined market share is about 30%, still below T and VZ which hold about 34% each. You could argue that the increased size of T-Mobile and Sprint together makes them a more viable competitor to T And VZ, so the merger actually improves competition. On the other hand, I followed the attempted merger of Office Depot and Staples in the late 90s very closely. OD and Staples argued that everyone and their cousin carried pencils and paper, therefore their merger was not anti-competitive. I was intimately familiar with OD's operations. In no way could OD and Staples, big box discounters that sold in volume to the SOHO sector, with delivery services, be compared to K-Mart's "back to school" department. As soon as the proposed merger was announced, I said "there is no way the government will let #1 and #2 in the industry merge". I was right. The smaller fish in the sector were gobbled up. Staples took over Corporate Express. Boise Office Products took over Office Max and took the Office Max name, then OD took over Office Max. But, to this day, #1 and #2, Staples and OD, are separate companies. I'm old enough to remember when Radio Shack took over Allied Radio, another electronics store chain, exactly like RS. The government broke that one up, forced RS to divest Allied. I stand by my assessment. The government will not let two auto sellers in the US combine if their combined market share is greater than GM's, even though GM has frittered away most of the market share it used to have, thus lowering the bar.
  
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- Ect on Jun 12, 2019
  
  @Steve203 The '90s was quite a while ago. Since then, a number of industries have consolidated back to 3-4 major players, without any pushback by DoJ or FTC. There are at least 12 companies with a significant share of the US auto market, so it's hard to argue that reducing this number by 1 or 2 is going to substantially reduce competition. A blanket assertion that DoJ would contest any combination in the auto sector is, IMO, not supported by (in fact, contrary to) real world experience in the 21st century to date and so cannot be considered a sure thing. One can never say never, of course, but I certainly don't see the DoJ leopard suddenly changing its spots. Especially under the current Administration.
  
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- Steve203 on Jun 12, 2019
  
  @ect "One can never say never, of course, but I certainly don’t see the DoJ leopard suddenly changing its spots. Especially under the current Administration." Yes, indeed, you can never say never. Sinclair Broadcast Group is particularly friendly to the present administration, yet only a year ago, the FCC blocked Sinclair's acquisition of Tribune Broadcasting. In 2011, the DoJ blocked AT&T's acquisition of T-Mobile, but, as you said, that was under a prior administration. I will be watching future developments wrt FCA with great interest.
  
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WallMeerkat on Jun 14, 2019

There was something - they shared a city car. Ford replaced their radically designed Ka with a toned down design and based it on the same platform as the Fiat 500. Fiat over the past few years ago had platforms shared with: Ford (500) Suzuki (Sedici) GM (Punto) Jeep (500L) Peugeot-Citroen (Ulysse) Mazda (124) Renault (Talento van) and Mitsubishi (Fullback)

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