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VW Group now open to Fiat Chrysler merger talks

By Barry Park, 15 Mar 2017 News

VW Group now open to Fiat Chrysler merger talks

A week after saying he wasn’t ready for talks about a merger, VW chief Matthias Mueller now has a change of heart

VOLKSWAGEN Group has opened the door to a possible merger with Fiat Chrysler Automobiles after posting a strong financial result for 2016 despite the growing cost of the Dieselgate scandal.

The group posted a 5.14 billion Euro ($A7.2 billion) profit for the 2016 financial year, and only a year after recording its biggest-ever loss after racking up more than $US25 billion ($A33 billion) in fines in the US tied to its diesel emissions cheat scandal.

The strong result came on the back of Volkswagen’s luxury brands, Porsche and Audi, which both grew sales and improved revenue for the group.

When asked about the potential for a merger in the wake of GM’s sale of Opel to European carmaking rival PSA Group, VW Group chief executive Matthias Mueller said: "We are more open on that account than we used to be previously."

Although he said Volkswagen’s rethink on a potential merger was “nothing to do with FCA specifically,” he told reporters at the group’s annual results announcement overnight: "It would be very helpful if [FCA chief executive Sergio] Marchionne were to communicate his considerations to me too and not just to you."

Marchionne last week said Volkswagen would be the hardest hit by PSA Group’s buyout of GM-owned Opel and its British sub-brand Vauxhall, which would make PSA – which also owns Citroen and Peugeot – the second-largest carmaker in Europe behind Volkswagen.

At the time, Mueller was quick to quash the rumours suggesting the potential for a merger. "We are not ready for talks about anything ... we have other problems," he told Reuters.

Last year, Volkswagen Group sold 10.4 million vehicles globally including via its Chinese joint ventures, overtaking Toyota’s 10.2 million sales to become the world’s largest carmaker.

Sales of Volkswagen-branded passenger cars fell slightly in 2016, while luxury marque Audi grew its sales. The best-performing brands, though, were value-focussed Skoda and sports car and SUV maker Porsche, which both grew strongly – Porsche set a revenue record despite its big spend on a push into “electrification, digitalisation and new business fields”.

The carmaker has also grown to become more than just a company selling cars; it’s finance division also contributed a record 2.1 billion euro profit to the result.

And what of Volkswagen Group’s future? It reckons it is on track to sell even more cars next year, despite the ongoing fallout from Dieselgate.