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Sergio not giving up on GM; Suzuki free of VW

by Bill Cawthon on

In an article in Automotive News, Larry Vellequette reported that Fiat Chrysler CEO Sergio Marchionne isn’t giving up on a merger with General Motors, as we reported earlier today.

Marchionne showed Mr. Vellequette spreadsheets and figures, saying that the merged companies could realize an EBITDA (earnings before interest, taxes, depreciation and amortization) of $28-$30 billion in a market with a seasonally adjusted annualized rate of 17 million cars and light trucks.

Hostile-Takeover-Hug-Web

Analysts such as Max Warburton and Arndt Ellinghorst have said a merger might yield the financial benefits Marchionne predicts. Mr. Warburton has also said that if there is anyone who could make a merger happen, it would be Marchionne.

Mr. Marchionne says he doesn’t want a hostile takeover, “Not hostile. There are varying degrees of hugs. I can hug you nicely, I can hug you tightly, I can hug you like a bear, I can really hug you. Everything starts with physical contact. Then it can degrade, but it starts with physical contact.”

(General Motors CEO Mary Barra has not commented on Marchionne’s imagery nor has her husband, Anthony E. Barra, president of Filament Consulting.)

Mr. Marchionne has already said he is willing to enlist the help of Wall Street, such as activist shareholders like Harry Wilson and his team of hedge fund managers, to apply pressure to the GM board.

Mr. Marchionne told Mr. Vellequette that there are other prospects and says he could sell or merge Fiat Chrysler today. However, none of the other options are as desirable.

Suzuki: VW Out, FCA In?

suzukiOne potential merger that has been discussed has taken a step closer to being possible. An international tribunal has ruled that Volkswagen must give up its 20% stake in Suzuki Motor Corporation.

With the ruling, Suzuki is free to pursue other partnerships, such as one with FCA, though Automotive News reported that Suzuki  wants to retain its independence.

Suzuki had $25 billion in worldwide revenues and $796 million in net income last year, so it’s not the deep-pockets partner FCA CEO Sergio Marchionne has been seeking. However, it does have extensive experience in low-cost manufacturing a strong presence in India, with virtually no overlap with the Chrysler brands.

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for just-auto.com, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.

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