Chinese automakers show interest In buying FCA due to its wide footprint and the government’s pressure to expand beyond their borders
At a premium over its market value, one Chinese brand is reported to have made an offer to buy FCA this month. The Italian-American has been up for sale for more than two years and its only and latest offer seems to have been rejected according to a report emerged on Automotive News. However, it was not the end of a potential buyout as representatives from other big Chinese automakers have conducted reasonable steps including meeting with US retail groups.
While Chinese executives were seen reportedly present last week at FCA’s HQ in Michigan, FCA authorities have traveled to China to convene with Great Wall Motors – China’s largest SUV and pick-up truck manufacturer. Wondering why Chinese brands showing interest in FCA? Since the arrival of CEO Sergio Marchionne, the global brand has expanded in mainstream segments and due to its worldwide presence, Chinese companies, who are under pressure to go beyond their borders, are finding it a perfect resume.
SAIC, who is entering India with MG Motors in 2019, is a Chinese automaker and in the future we could see more from that nation as government wants them to lay their footprint beyond own territory. Do we really need to buy them is a separate story though! Back to FCA, it is yet unsure who all are involved in the tussle for a potential purchase as Dongfeng Motor, Great Wall, Zhejiang Geely Holding Group and FCA’s JV partner Guangzhou Automobile Group are some suspected names.
If a sale comes into fruition, the Iconic and profitable Jeep brand, will become Chinese along with Ram, Chrysler, Dodge and Fiat while missing out on Italian trio of Ferrari, Maserati and Alfa Romeo as the holding company Exor that owns a controlling interest in FCA wants maximum returns from them. The Chinese companies have long been looking at entering developed and emerging markets through solo run or JV.
They have come good in terms of engineering aspects in a short period of time courtesy of joint ventures with global manufacturers though but expanding beyond their home has always been a challenge. FCA, which has a wide variety of brands within and manufacturing facilities worldwide, could help them make a turnaround.