AF: This Just In...(Revision to Merger Agreement € / $) | Page 6 | Allpar Forums
  1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

This Just In...(Revision to Merger Agreement € / $)

Discussion in 'Mopar / FCA News' started by 77 Monaco Brougham, Sep 14, 2020.

  1. Chrysler UK

    Chrysler UK Active Member

    Joined:
    Sep 12, 2020
    Messages:
    92
    Likes:
    66
    To be fair, I feel that the European Comission is forgetting that Ford & VW combined have a LCV market share that is only marginally behind Stellantis LCV market share, as well as the fact that 34% does not constitute a "monopoly" by any means.
     
  2. Stéphane Dumas

    Stéphane Dumas Well-Known Member

    Joined:
    Jan 20, 2002
    Messages:
    3,477
    Likes:
    716
    I guess that comfirms my suspicions then Renault is the one who'll lost the most. They'll be 3rd behind Stellantis and Ford-VW.
     
  3. KrisW

    KrisW Well-Known Member

    Joined:
    Jan 8, 2015
    Messages:
    2,374
    Likes:
    4,838
    Ford-VW is not a company. Renault will be vying for second place with Ford and Volkswagen.
     
  4. Chrysler UK

    Chrysler UK Active Member

    Joined:
    Sep 12, 2020
    Messages:
    92
    Likes:
    66
    Well then they can blame the French Government for blocking a FCA-Renault merger and then approving a FCA-PSA merger instead. Regardless if Renault want to improve their competitve position in the LCV Market, they can always form a JV with Damiler to produce Medium & Large LCVs. Especially when both of them already have a JV to produce Compact LCVs*

    *Hence why the Renault Kangoo forms the basis for the Mercedes-Benz Citan

    There is a very good chance that Volkswagen might end up buying Ford in the next few years. Likewise there is not exactly a lot of motivation on either party to compete against each other thanks to this JV.
     
  5. aldo90731

    Staff Member Level III Supporter

    Joined:
    Jul 6, 2010
    Messages:
    10,310
    Likes:
    21,726
    Doubt it. The Ford family wouldn’t sell.

    All those Ford descendants living lavishly off the company for 100 years would have to actually start to work for a living.
     
    tabutler, gforce2002, Tony K and 3 others like this.
  6. Chrysler UK

    Chrysler UK Active Member

    Joined:
    Sep 12, 2020
    Messages:
    92
    Likes:
    66
    They would make more money in the long run by selling Ford to Volkswagen than to continue owning it themselves.

    Because the fact of the matter is that Ford is far too small to survive as an independent carmaker in the age of BEV's and is strugging to make any profits outside North America. Likewise Volkswagen doesn't have a strong presence in North America (compared to Europe, Asia & Latin America) & finds it difficult to make decent profits in Europe (due to the high levels of competition & overcapacity in that continent's automobile market).

    So it makes sense for both parties to agree a takeover of Ford by Volkswagen and I am not the only one who hold this view*.

    *Is Ford For Sale? (at https://www.forbes.com/sites/jimcollins/2020/04/13/is-ford-for-sale/#6eff85104394 )
     
  7. 77 Monaco Brougham

    77 Monaco Brougham Well-Known Member

    Joined:
    Jan 15, 2017
    Messages:
    2,284
    Likes:
    3,535
    If Henry Ford were alive to see the sorry state of FMC these days...It would kill him!:p:D
     
    Tony K and Chrysler UK like this.
  8. Chrysler UK

    Chrysler UK Active Member

    Joined:
    Sep 12, 2020
    Messages:
    92
    Likes:
    66
    Well he can blame his Grandson for turning down the opportunity for FMC to obtain Volkswagen when (after WW2) they had the chance. :D

    Although to be fair, his grandson did also sack Iacocca as well...
     
    77 Monaco Brougham and Tony K like this.
  9. KrisW

    KrisW Well-Known Member

    Joined:
    Jan 8, 2015
    Messages:
    2,374
    Likes:
    4,838
    You say this a lot. I very much doubt it: If you're speaking of Ford of Europe, then a. Ford has a big enough foothold in Europe to ride this out (and unlike GM, it does use its European engineering resources in the USA, and vice-versa), and b. VW does not have the money. If you're speaking of Ford Motor Company, then a. VW does not have the money, and b. VW does not have the money.
     
  10. Chrysler UK

    Chrysler UK Active Member

    Joined:
    Sep 12, 2020
    Messages:
    92
    Likes:
    66
    Ford is consistantly struggling to make money in Europe (1), a problem that has little prospect of getting better due to the highly competitive nature (& overcapacity) of the European Automobile Market and of course the Economic After-Effects of this Pandemic.

    So while it would be stupid for Ford to pull out of Europe (2); they need to merge with somebody else to address their "European Problem", especially when Ford is also struggling in both Latin America & the Asia-Pacific Region while also facing big costs over the development of BEV's

    (1) Ford Motor Staying In Loss-Making Europe -- For Now (at https://www.forbes.com/sites/neilwinton/2019/01/10/ford-motor-stays-in-loss-making-europe-for-now/#6a8ab9326606 ) + Ford to cut 12,000 jobs in Europe amid struggling car market (at https://www.theguardian.com/business/2019/jun/27/ford-to-cut-12000-jobs-in-europe-amid-struggling-car-market ) + Where Ford Is Failing, and What It's Doing About It | The Motley Fool (at https://www.fool.com/investing/2019/02/25/where-ford-is-failing-and-what-its-doing-about-it.aspx ) + The car industry now: Could Ford follow GM out of Europe? | Autocar (at https://www.autocar.co.uk/car-news/industry/car-industry-now-could-ford-follow-gm-out-europe )

    (2) Considering how intergrated Ford of Europe is with Ford's North American Operations, alongside the fact that pulling out of one of the biggest Automobile Markets in the World is a bad idea if you want to survive as an independent automaker.

    Volkswagen can agree an All-Share Deal with the Ford Motor Company if they "don't have the money". Which is not unusual considering that the FCA-PSA merger is also an All-Share Deal.
     
    77 Monaco Brougham likes this.
  11. KrisW

    KrisW Well-Known Member

    Joined:
    Jan 8, 2015
    Messages:
    2,374
    Likes:
    4,838
    Ford is in transition, and will come back: it’s doing the right things with electrification, and it’s creeping back towards the idea of global product (Mach-E, for instance)

    If VW wanted to acquire American market access and a truck portfolio, then General Motors is right there, and they’d get it far cheaper, with no messy extra factories in Europe to deal with.

    Sure, VW could use stock to buy a carmaker - but you can’t use shares as staff redundancy payments, and you can’t re-tool factories with them either. Acquiring Ford and doing nothing with it would be of no benefit to VW: it would need to buy it, close excess capacity and re-tool the surviving sites to build common VW products - all of which would cost money. Which —forgive the repetition, but I think it’s important to stress— VW has not got.

    2020 has left nobody with cash on hand, and those with the biggest capacity were hit the hardest.
     
  12. 77 Monaco Brougham

    77 Monaco Brougham Well-Known Member

    Joined:
    Jan 15, 2017
    Messages:
    2,284
    Likes:
    3,535
    It really would be a delicious irony if...by some strange bend in the road...FMC were to be acquired one way or another by VAG...in light of the fact that just after the Second World War, FMC was offered VAG on the proverbial 'silver platter'...and was short-sighted enough to refuse the offer.

    At some point in the fairly recent past, VAG probably DID have enough money to swallow up FMC...But, I'm now assuming that the costs of converting to the BEV world of the 21st. Century combined with VAG's ongoing expenditures to clean up the mess they created with the Diesel fiasco now makes that impossible.

    I'm no financial expert (I don't even play one on TV;))...But...wouldn't an All Stock deal of some sort between VAG and FMC result in the Ford family NOT being in effective control of the new combined entity? To me, THAT sounds like an outcome that would be unacceptable to the Ford family.

    Wouldn't an alliance (some version of Renault / Nissan / Mitsubishi)...where each company would remain in control of its own portion of the alliance...be much more likely?
     
    #112 77 Monaco Brougham, Sep 29, 2020
    Last edited: Sep 29, 2020
  13. jerseyjoe

    jerseyjoe Plymouth Makes It

    Joined:
    Apr 13, 2002
    Messages:
    8,093
    Likes:
    2,190
    Chrysler was destroyed by the last 3 owners, actually Daimler did a good platform with less than spactular base model. We purchased a 2006 base model, not an attractive interrior but it lasted 2 grand children for a 11 years looking much like the day we purchased it, worth every cent. 2015, 300s looks great from the outside, our 3 year old grand daughter and her gear has done a number on the inside. Running gear is just fine except for 3 sets of abs sensors. Great fuel economy but suspension belongs on a truck. I am sure this is the last NEW FCA we will ever purchase. Will probably get a body on frame Grand Cherokee if needed. Really don't know how people can afford any new vehicle.
     
  14. Chrysler UK

    Chrysler UK Active Member

    Joined:
    Sep 12, 2020
    Messages:
    92
    Likes:
    66
    The "profitablity problem" for Ford has less to do with their product range (1) and more to do with the fact that the European Automobile Market has too many players & too much overcapacity, the fact that Ford's Asia-Pacific presence is far too small and the fact that their Latin American Operations are struggling.

    So the fact that they are only making money in North America is not good when carmakers need to consolidate to both improve their margins and afford the move to BEV's, even if Ford themselves are (generally) moving in the right direction when it comes to their products.

    Thats why they have got to merge with somebody else.

    (1) Although the issues in their Australian Product Range have not helped them Down Under.

    I would agree that Volkswagen would be better off buying General Motors (1) from a North American perspective alone. However they still need to consoldiate their position in Europe as well; so considering that Ford have a major presence in both Europe & North America, the fact that they already have a working partnership with Volkswagen and the fact that their market value is less than GM's, it would make more sense for Volkswagen to buy Ford over GM.

    I would point out however; that if Volkswagen wants to secure its long-term future (2), they really need to purchase both Ford & General Motors within the next decade (3). An view that would annoy a lot of Ford & GM enthusiasts for sure, but its a move that Volkswagen needs to make. So the real question should not be if Volkswagen should buy either Ford or GM, but rather which one they should buy first.

    (1) I have long held the view that the biggest mistake GM made after getting rescued was not merging with Volkswagen. Certainly it would have been a better idea than to just simply abandon Europe, India, South Africa & Australia/New Zealand.

    (2) By establishing a commanding position in the North American Automobile Market that is similar to their commanding position in the European Automobile Market.

    (3) Which would ultimately help Volkswagen establish the commanding position in the North American Automobile Market that they need.

    Volkswagen obtaining Ford of Europe would help address the competition & overcapacity issues that are undermining their margins in Europe.

    The costs of closing factories (1), paying out redundancy payments & retooling the remaining factories would likely be outweighed by the potential savings to be made from a Volkswagen takeover of Ford. While Volkswagen would also benefit from less competition (& higher margins) in the European Automobile Market (especially in Britain & Germany), since Ford of Europe is now out of the picture.

    Thus the only question that needs to be asked is if Volkswagen can raise the finance (2) to cover those intergration costs. Considering that only Toyota & Tesla are more "valued" by the World of Finance (within the Automobile Industry), I would doubt that they would find it too difficult.

    (1) Because of Brexit, its almost certain that Dagenham will close no matter who owns Ford.

    As for the other 5 Ford of Europe Factories however; now assuming that Ford of Europe ends up getting folded into Volkswagen themselves (with the Ford Brand being only used in North America, Latin America & maybe Australia/New Zealand), I would imagine that Saarlouis & Valencia would definitely close, Kocaeli would depend on if Volkswagen would prefer to make their vans in either Germany/Poland or Turkey while one of Cologne or Craiova would have to close as well.

    (2) Remember that not only are Interest Rates at All-Time Lows, but investors are playing it safe and that Stellantis will have to do the exact same thing to cover their own intergration costs.
     
  15. Chrysler UK

    Chrysler UK Active Member

    Joined:
    Sep 12, 2020
    Messages:
    92
    Likes:
    66

    Ford has made a fair few big mistakes during its 117 Year History; from allowing General Motors to overtake them to stupidly selling Jaguar Land Rover. It's clear though that turning down the Volkswagen offer would have to be their biggest mistake.

    Volkswagen could afford to buy Ford via an all-share offer. Likewise they also need Ford's North American Profits (and greater profitablity in Europe after buying Ford) to help pay for the costs of the BEVs in question.

    Unless they can bribe enough people in Congress to grant them an interest-free loan to buy Volkswagen (and merge it with FMC), the Ford Family will simply have to accept that they are in no position to own a carmaker that is large enough to survive as an independent one (in the long term).

    So they have 2 simple choices; either sell up and cash in the Billions or end up selling up for a lot less further down the road.

    The History of Renault-Nissan-Mitsubishi Alliance shows exactly why no one else has embraced their model. Especially when there are less intergration-related benefits from an Alliance than there is with a Full-Blown Merger, mainly because of the lingering possiblity that said Alliance might fall apart at some point.
     
    77 Monaco Brougham likes this.
  16. Adventurer55

    Adventurer55 Well-Known Member

    Joined:
    Nov 9, 2015
    Messages:
    3,413
    Likes:
    4,437
    Well my two cents says, that one of those two could become foreign owned, but not both. I don't see the government granting approval so no car company anymore is American owned. Chrysler? Heck yeah, no one cares about them. Ford or GM? One could go the other one won't. Pick whichever, the government won't allow both.
     
    KrisW likes this.
  17. patfromigh

    patfromigh Well-Known Member

    Joined:
    Jan 22, 2010
    Messages:
    3,610
    Likes:
    3,350
    I suspect Ford is drifting towards being more of a mobility company than a car maker. They will still make vehicles, but will sell less of them at retail. The rest of production will be offered through a subscription service like what is done with smart phones.
     
    KrisW likes this.
  18. KrisW

    KrisW Well-Known Member

    Joined:
    Jan 8, 2015
    Messages:
    2,374
    Likes:
    4,838
    Does Ford still have a connection to Hertz?
     
  19. patfromigh

    patfromigh Well-Known Member

    Joined:
    Jan 22, 2010
    Messages:
    3,610
    Likes:
    3,350
    Not that I know of. They sold off their holdings, but they still might hold some shares. Right now they aren't selling products to any of the rental companies here in America. There are a lot of crazy rumors around concerning Ford.
     
    KrisW likes this.
  20. 77 Monaco Brougham

    77 Monaco Brougham Well-Known Member

    Joined:
    Jan 15, 2017
    Messages:
    2,284
    Likes:
    3,535
    I think 'drifting' is an excellent word to describe what I feel is going on at FMC.

    It feels to me like they've been a bit rudderless...letting outside events dictate their next few moves...sort of a 'Direction Du jour'.
     
    Chrysler UK likes this.

Share This Page

Loading...
 We are not affiliated with FCA. We make no claims regarding validity or accuracy of information or advice. Copyright © VerticalScope Inc. All rights reserved.