Hyundai rubbishes rumours of FCA takeover – report

Rumours have long linked Hyundai Motor Group with a potential takeover of Fiat Chrysler Automobiles (FCA) – as early as September last year, in fact. Those rumours intensified recently as an Asia Times released a new report claiming that the South Korean conglomerate has become more interested in the deal.

Sources close to the matter said that the Korean conglomerate’s CEO Chung Mong-koo is waiting for FCA’s share prices to drop before swooping in to buy the Italian-American giant. The bid will apparently be launched sometime between this summer and Sergio Marchionne’s stepping down as FCA’s CEO in May 2019.

Hyundai, however, has hit back at the rumours, with the company’s senior group manager of corporate and marketing public relations Michael Stewart pointedly telling CNET‘s Roadshow, “That rumor is totally groundless.” Roadshow also reached out to FCA, but it declined to comment.

That doesn’t mean such a mega-merger wouldn’t make financial sense, not least because the combined entity would immediately become the world’s largest carmaker in terms of sales. The two companies would also have the least product and manufacturing overlap, compared to other carmakers like Volkswagen – such redundancies could trigger factory shutdowns that would be met with almost insurmountable opposition.

More importantly for FCA, its electric vehicle portfolio lags far behind the competition, so a Hyundai-FCA merger would allow it to leverage on its partner’s electric propulsion technology, and avoid an impending crisis. Meanwhile, Hyundai could take advantage of Chrysler’s distribution network in the United States and the iconic Jeep SUV brand to shore up flagging sales in the US.

Last but not least is an existing free trade agreement between the US and South Korea, which would make parts sharing much easier, as well as making the merger an easier pill to swallow for the administration of US president Donald Trump.

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