Shares of General Motors (NYSE:GM) were trading 0.7 percent higher today as Fiat Chrysler, or FCA, (NYSE:FCAU) has stepped up efforts to secure a merger between the two automobile companies.
But, this afternoon, General Motors continued to maintain its distance from FCA’s advances, despite the more aggressive approach taken by the Italian-American group’s CEO, Sergio Marchionne.
GM’s chief executive Mary Barra stressed that the Detroit giant "is not interested in a merger with FCA," noting it would not generate savings and halt the revitalization of the various business implemented by the new management.
"We have already taken advantage of the partnership opportunities," said Barra in a statement, who also confirmed that she had been in contact via email with Marchionne, and that it he particularly interested in an industry consolidation in the US market.
Meanwhile, GM appears more concerned about managing the PR debacle over recalls that have landed it in trouble with the US Justice Department for alleged fraudulent communications. over the company's failure to recall vehicles equipped with faulty ignition switches.
The ‘Wall Street Journal’ has reported that FCA’s chief executive Sergio Marchionne, whose earlier advances were also flatly rejected, has contacted hedge funds and activists to demonstrate the seriousness of his intention and convince General Motors to merge with his group.
Marchionne has not shied from expressing his belief that the car industry demands mergers among the industry’s giants and leaders, such as has occurred for banking and oil sectors some years ago.
Marchionne says consolidation in the auto industry is inevitable and in the short term, FCA may consider alliances with a Japanese group such as Suzuki or Mitsubishi, or another group based in Asia, where FCA is still struggling to carve a share of the market to match its competitors. That said, Marchionne would not be shy to weave alliances with Apple or Tesla.
Marchionne is intent on strengthening the group that he has led for the past decade and that in the coming years will offer many new models from the entire range of its brands – including Ferrari and Maserati. Fiat is slated for a repositioning in the world auto market, with the transition from generalist to specialist car company, focusing on the type of cars that generate the highest profits.
This means expanding the 500 range, which despite lower sales this year has opened the market for FCA, marking the company’s return to the US market after a more than 25 year hiatus.
Fiat will launch SUV / crossover, a new segment for the company and one where it intends to lead with the launch of new models over the next few years. In Europe, its new 500X crossover has been a market success.
Alfa Romeo, a 105 years old name in motoring, known to BBC’s Top Gear fans as the car you must own at least once in a lifetime to be considered a true motorhead, is one of the major cards that Marchionne is playing to boost FCA’s fortunes.
From now until 2018, Alfa Romeo will release of no fewer than eight entirely new models. They will all aim to compete in at the premium market level in an effort to restore the marque to its past glory.
The forthcoming Alfa Romeo Giulia will represent just an appetizer of what will be a real revolution for the Italian house, which plans to increase production from about 70,000 new vehicle registrations in 2014 to over 400,000. Alfa Romeo, which has returned to North America after an almost 20 year hiatus with the 4C mini-supercar.
Chrysler, part of FCA, sold 4 percent more vehicles in March 2015 compared to a year earlier, setting a new US record for the company, suggesting that Marchionne’s growth plan is on target and the group has achieved sales of over five million units sold worldwide.
FCA’s shares on the New York Stock Exchange were trading 1.57 percent lower on Tuesday at US$15.34, but they have risen by about 35 percent since the start of the year, a much higher rate than any of the rival groups: GM is up 3.7 percent for the same period and Ford down about 0.7 percent.