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VW, Fiat Chrysler deny merger talk rumours

VWF?: A union between car-giants Fiat Chrysler and Volkswagen could help waning sales of the German brand in America.

Magazine report hints that Volkswagen wants in on Fiat’s US action

Volkswagen logo18 Jul 2014

VOLKSWAGEN Group is looking at either a complete or partial takeover of the newly merged Fiat Chrysler Automobiles, a German magazine report says.

Manager Magazin said boardroom level talks between the two car-makers had started, although both Volkswagen and Italian-American car-maker Fiat Chrysler have since denied any negotiations have taken place.

The magazine story quoted unnamed sources who claimed VW chairman Ferdinand Piech had approached the Agnelli family, a 30 percent shareholder in the FCA group of brands that includes Jeep, Dodge, Alfa Romeo, Fiat and luxury sportscar brands Maserati and Ferrari, to discuss the possibility of a merger.

According to the article, the takeover of Fiat Chrysler would help Volkswagen gain a strategic foothold in the US via the Chrysler brand – and important strategic move for the German, which has seen its market share in North America start to slide.

Volkswagen has previously expressed an interest in buying out Fiat’s stake in Alfa Romeo as the Italian car-maker struggled to rebuild its financial strength after years of cautious merger talks with US brand Chrysler.

After more than a decade, the merger was finalised earlier this year, with the newly formed Fiat Chrysler Automobiles laying out a comprehensive new-model roll-out with platforms shared between the Italian and US divisions.

A Volkswagen spokesman told Reuters overnight that the German brand was not in any merger talks with competitors.

"There are currently no M&A (merger and acquisition) projects on the agenda," the spokesman said. "We are now focusing on boosting efficiency across the group."The Agnelli family’s investment-based holding company, Exor, also issued a statement denying any talks had taken place.

Volkswagen is sitting on more than $A25 billion in cash reserves thanks to its recent market strength from brands including Skoda, Seat, Volkswagen and premium brands including Audi, Lamborghini and Porsche.

The Manager Magazin story also flies in the face of comments earlier this year from VW chief executive Martin Winterkorn, who said the group had no plans to expand its brands beyond its current crop of 12.

Volkswagen is still enjoying slight growth in Australia, with sales up by 3.3 per cent for the first six months of this year compared with the first half of 2013.

Fiat Australia, meanwhile, is enjoying strong growth this year after a market repositioning late last year that has seen it snare almost four times the number of sales so far in 2014, while fellow Italian marque Alfa Romeo has almost doubled sales using the same strategy.

Chrysler, meanwhile, has slumped 17.6 per cent in Australia compared with the first half of last year.

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