Volkswagen + Fiat =???| Grassroots Motorsports forum |

bigdaddylee82 Dork
7/17/14 8:23 a.m.

The new Cummins Powered Touareg, or maybe a TDI Dart Abarth...

http://www.reuters.com/article/2014/07/17/us-volkswagen-fiat-spa-idUSKBN0FM0RU20140717

(Reuters) - Volkswagen (VOWG_p.DE) has held talks with owners of Fiat Chrysler Automobiles (FIA.MI) about purchasing the Italian carmaker, German monthly magazine Manager Magazin reported on its website on Thursday, citing unnamed company sources.

Fiat's owners want to shift their focus to the Ferrari brand and quit its traditional automotive business, the publication said, without being more specific.

Shares in Fiat jumped 5 percent to 7.98 euros on the news, while VW's stock was 1.5 percent lower at 186.70 euros.

Both VW and Fiat declined to comment. The Agnelli family's holding firm Exor (EXOR.MI), which owns a 30-percent stake in Fiat, had no immediate comment.

Manager Magazin said VW and Fiat's owners were still far from reaching an agreement on a possible price for the Italian carmaker.

By purchasing Fiat Chrysler, VW is hoping to use Chrysler's U.S. distribution network to help solve its own problems in the world's No. 2 auto market where sales of the core VW car brand have been flagging, it said.

VW Chief Executive Martin Winterkorn told the carmaker's March 13 annual news conference that VW has no plans at present to expand the group through further acquisitions as it is focusing on integrating its 12-brand network.

VW, which had cash reserves of almost 18 billion euros ($24.36 billion) at the end of March, has repeatedly expressed an interest in Fiat's Alfa Romeo brand despite rebuttals from Fiat CEO Sergio Marchionne.

(Reporting by Andreas Cremer; additional reporting by Agnieszka Flak in Milan; editing by Maria Sheahan and Jason Neely)

Klayfish SuperDork
7/17/14 8:34 a.m.

Wow, putting VW and Fiat together. Build quality should soar to near Yugo levels...

Junkyard_Dog SuperDork
7/17/14 8:44 a.m.

bigdaddylee82 wrote: By purchasing Fiat Chrysler, VW is hoping to use Chrysler's U.S. distribution network to help solve its own problems in the world's No. 2 auto market where sales of the core VW car brand have been flagging, it said.

Um, I don't see how more sales channels will fix the quality issues.

RossD PowerDork
7/17/14 8:48 a.m.

Does this feel like the Porsche-VW stock grab from about 5-10 years ago to anyone else?

*I may not be remembering that fiasco correctly but it was the first thing that came to mind.

Feedyurhed SuperDork
7/17/14 9:29 a.m.

Wow that's kinda weird. Fiat wants to focus on Ferrari and get out of the more traditional automotive business Huh? How many cars can Ferrari sell? What's this mean for the Alfa Romeo roadster developed along with the new ND Miata? Now it will be the VW/Audi/Fiat/Chrysler group? A few more years and Chrysler will have been owned by just about everybody. So many questions, so much weirdness.

petegossett GRM+ Memberand PowerDork
7/17/14 11:52 a.m.

Feedyurhed wrote: A few more years and Chrysler will have been owned by just about everybody.

And one of these days it's bound to land in the hands of GRM - probably as a group-buy.

etifosi New Reader
7/17/14 12:16 p.m.

petegossett wrote:
Feedyurhed wrote: A few more years and Chrysler will have been owned by just about everybody.
And one of these days it's bound to land in the hands of GRM - probably as a group-buy.

I think I reported "Sergio M - new reader" as a canoe when he listed "like new chrysler for sale" in the $2014 classifieds.

Tom_Spangler GRM+ Memberand Dork
7/17/14 12:19 p.m.

My cousin who follows the auto industry way more closely than anyone who doesn't work in it should, says this:

Ah yes, Ferdinand Piech is up to his old tricks of berkeleying with Sergio Marchionne. Those two hate each other. Of course a merger makes sense - the VW Routan was such a great seller. Okay sarcasm over.

Here is why it ain't gonna happen: Agnelli family just went through a huge shuffle to get their company Exor to combine with Chrysler. Exor is the family holding company that controls Fiat shares. There will be a special stock issue in the new Fiat Chrysler company that will give the Agnelli family, through Exor, a special class of stock with super voting powers. Kind of like Ford's class B stocks for the Ford family.

The story says Agnellis would only keep Ferrari because it is so profitable. Ferrari is so profitable because it sells engines to Alfa Romeo and Maserati. Ferrari by itself it too small to be a stand alone business - see Aston Martin.

VW doesn't have the ability to manage the 12 brands it currently has. It is facing double digit sales drops in Brazil, one of its largest markets as well as India. It is struggling here in the states. China is the only place where VW is raking in money.

It's vaulted new MQB chassis architecture has come in way over budget and has driven up its car costs. So much so, that VW is pushing off development of Porsche models for at least a year. Probably other programs too, although I have only read about Porsche stuff being delayed so far.

The biggest reason this isn't going to happen is there is no business case for it that makes sense and there is no money lined up for the deal to happen. Fiat is burning cash right now as it tries to turn its operations around. VW would need Fiat from Fiat Chrysler to pay down the huge debt it would take on through a merger.

Basically, this is a 73 year old Piech being a dick and trying to make a legacy for himself. His best legacy will be when he dies.