Italian-American carmaker Fiat Chrysler Automobiles would be an alluring takeover target for a Chinese company, instantly putting it at the top rung of the U.S. auto industry, analysts say.
In July, a well-known but unnamed Chinese automaker made at least one offer to buy Fiat Chrysler at a price supposedly above its current market value, the industry news site Automotive News reported earlier this week. Fiat Chrysler declined to answer questions from Agence France-Presse (AFP) but its share price jumped nearly 10 percent on the news. According to Automotive News, the Italian-American auto giant rejected the Chinese company's advances, because the offer was too low. With sales of its models ebbing in the United States, a Chinese acquisition could offer a lifeline to Fiat Chrysler, in particular for its Chrysler, Dodge and Fiat brands. A sale also could provide the means for the company to boost its research and development.
"It won't be a merger. It will be an outright sale," Joseph Phillippi, president of Auto Trends Consulting, said. He notes that Fiat Chrysler produces the Jeep and Ram brands which not only are popular in the United States but also in China and elsewhere.
"FCA would get access to small cars that would be made in China but could really be something pretty nifty with FCA's design help."
Fiat Chrysler would not be the first major automaker to come under Chinese control or to look for ways to break into that huge market. Sweden's Volvo was acquired by China's Geely in 2010 and has seen strong sales growth since, with the Chinese market accounting for 20 percent. U.S. auto giant General Motors now sells more cars in China than in the United States, with 287,500 sold in China in July compared to 226,100 in the U.S. market. FCA, which is controlled by Italy's Agnelli family, currently sells 4.5 million cars worldwide under its brands: Fiat, Chrysler, Jeep, Dodge, RAM, Alfa Romeo and Maserati. FCA CEO Sergio Marchionne spun off Ferrari in 2015 and could do likewise with Alfa Romeo and Maserati. So selling Fiat, Dodge, Chrysler, Jeep and Ram to a Chinese investor could fit in with that corporate strategy. And Italian newspaper Corriere della Sera said recently the Chinese suitors "have already shown that they are not invaders (for now), and that they can respect the history, culture and human resources of the businesses they take over."