IF YOU take the word of Fiat Chrysler Automobiles, a potential takeover by Great Wall is nonsense and nothing but rumour, but on the other hand, a US publication is reporting that the Chinese car maker has already approached or plans to approach FCA about the possibility of a deal.
Who is to be believed, is there anything to the claims, and what would one of the biggest global buyouts spell for the automotive world?
According to Automotive News, the Chinese manufacturer’s president Wang Fengying said the company is “connecting with FCA” to discuss the possibility of a buyout, but FCA has countered the claim with an official statement.
“In response to market rumours regarding a potential interest of Great Wall Motors in the Jeep brand, Fiat Chrysler Automobiles confirmed that it has not been approached by Great Wall Motors in connection with the Jeep brand or any other matter relating to its business”.
Fengying’s careful choice of the word ‘connecting’ creates an ambiguous date stamp and could be read either in the present or future tense. If it’s the latter, Great Wall has not yet opened a channel of communication with its target quarry and FCA’s response is concurrent for now.
Until FCA is willing to talk about negotiations, a deal to buy one or all of FCA’s brands remains purely speculative, but what are the implications of such a deal and could both parties conceivably come to an agreement?
It’s simpler to understand what’s in it for Great Wall. For a start, the company has made clear its aspirations to become the world’s largest SUV maker – a title it already holds in its native country.
Quite what the manufacturer would do with the Dodge, Chrysler and Fiat brands is least certain, it’s possible the Italian luxury badges Alfa Romeo and Maserati could be pared away as a stand-alone entity, but the Jeep brand appears to be the jewel in the FCA crown for Great Wall.
Not only would the iconic line-up of vehicles in its current form provide a springboard for Great Wall’s grand SUV designs, the company would almost certainly attempt to emulate Tata’s success when the Indian company acquired the Jaguar and Land Rover brands and turned the company around with a massive investment of cash and resources.
It might even try to pull a similar stunt with some of FCA’s ailing brands.
Further inspiration can be drawn from fellow Chinese auto goliath Geely, which bought Volvo in 2010 and rescued the Swedish marque from a bleak future.
Would that sit well with Jeep’s loyal and patriotic following in native United States? A move to Chinese ownership will not come without vocal animosity, but FCA is far from the flag-waving patriots Ford and GM. With a current Italian owner and a German keeper before that, Great Wall knows that the inevitable xenophobia would be overlooked in time.
A Great Wall spokesperson made no secret which of the FCA marques the company is most keen to get its hands on. “We are deeply interested in the Jeep brand and have paid close attention to it for a long time,” said Xu Hui.
On the other side of the fence, FCA will drive a hard bargain if it entertains the idea of a deal at all.
Whatever discussions fill the phone lines between Turin and Baoding, FCA CEO Sergio Marchionne’s impetus will be front and centre. In April, Marchionne confirmed that both Jeep and Ram brands could be spun off as standalone companies, indicating the boss is already considering fragmentation of FCA.
His previous high-level involvement with previous brand division and integration processes adds fuel to that fire too.
On local turf, FCA Australia has already initiated plans to perform a similar transition, as the country’s Alfa Romeo dealerships migrate away from multi-franchise premises to standalone luxury-focused spaces.
It is also believed that Marchionne has plans to merge with another car maker before retiring (a date that is yet to be made official), all of which adds weight to the theory that the FCA CEO is open to discussions regarding a new significant evolution in FCA’s history.
Perhaps some certainty can be imparted by reviewing FCA’s famous five year plan that it went public with in 2014, outlining all of its significant plans and road mapping the immediate future.
As part of the most recent statement, the company says it will honour all of its commitments as laid out in the plan and it can only guarantee its completion through retained ownership.
“FCA is fully committed to its 2014 to 2018 plan, having achieved each one of its targets to date and with only six quarters left to its completion,” it said in conclusion.
If a Great Wall buyout is on the cards, don’t expect anything to change hands until 2018 is out.
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