Sergio Marchionne, CEO of Fiat Chrysler, reportedly asked his counterpart at General Motors, Mary Barra, about the possibility of merger earlier this year, but was turned down.
A report in The New York Times claims that in March of this year, Marchionne sent Barra an email requesting a meeting to talk about a potential merger between the two automakers.
According to sources who have seen the email, Marchionne laid out in detail all the reasons why he thought a merger would be in the interests of both parties, with much of the logic driven by cost cutting and creating a corporation with even larger scale.
This piece of correspondence came as a bolt from the blue, as the two CEOs had never met in person before. It's believed that Marchionne's analysis did not impress either Barra or GM's executives, who turned down the offer.
Above: Sergio Marchionne (left), Mary Barra (right)
Since April, Marchionne has been outspoken about his desire to see a wave of consolidation amongst automakers. He began expounding his thoughts on the issue during a regularly scheduled call with financial analysts at the end of April.
During the call, the FCA boss declared that "it is absolutely clear that the amount of capital waste that’s going on in this industry is something that certainly requires remedy". And that remedy, in Marchionne's opinion, is consolidation.
These words were seen as a sign by many, including the sharemarkets, that Fiat Chrysler (FCA) was keen to find a merger partner. The company's stock fell around 10 percent in the days after that call with analysts.
In the second half of that call, Marchionne traded heated words with Max Warburton, an analyst at Bernstein who has stated on the record that he believes that FCA's "thin finances and highly leveraged balance sheet are amongst the weakest in the global auto industry".
Warburton summed up the call to Forbes thusly: "Marchionne states that it is not about ‘putting FCA up for sale’, or ‘a matter of life or death for FCA’, or '[Sergio Marchionne's] final big deal’. In reality, of course, it is all of those things."
In follow up comments to The New York Times, Marchionne said, "If I wanted to sell I would have called a banker". He did note that if Fiat Chrysler combined with another automaker, it could save billions of dollars and that "it’s fundamentally immoral to allow for that waste to continue unchecked".
The newspaper believes that Marchionne has had discussions with Apple and Google. The former is reportedly secretly developing a self-driving car, while Google already has a fleet of autonomous vehicles on the road.
It's possible that when these projects hit the production phase, the tech giants may need automobile production capacity or an automotive partner.
In the middle of last year, there were reports that Volkswagen Group had held talks with FCA about a possible merger; a spokesperson for Volkswagen denied that anything concrete was happening and that the company was focussing on its own internal cost cutting measures.