Marchionne would still merge with General Motors, but is it the right fit?

March 7, 2017

In December 2015, Fiat Chrysler Automobiles' CEO Sergio Marchionne admitted that he'd given up his dream of merging FCA and General Motors for the time-being.

But apparently, true love never dies: in the wake of yesterday's announcement that GM is selling off Opel/Vauxhall to PSA, reporters asked Marchionne if he was still interested in proposing to GM. 

His answer? A cautious "yes". 

From the floor of the Geneva Auto Show, Marchionne made it clear that he was eager to purse any and all tie-ups that made good business sense, including one with GM.

He did note, however, that the loss of access to Opel and Vauxhall made GM a less-attractive partner, since it minimized the benefits that FCA might reap in Europe, where much of the company's business is based. He went so far as to quantify the effect of the deal, stating that it would reduce the potential synergies of an FCA/GM marriage by about 15 percent.

That in itself doesn't appear to be a deal-breaker, but Marchionne isn't the lovestruck, starry-eyed idealist he was just a couple of years ago. He admits that without much of a European presence, GM might be less willing to merge with FCA than it was before. (As we recall, GM was pretty dead-set against a merger before, so how the company might be even less inclined now is something of a mystery.)

From where we sit, the best partner for Marchionne and FCA might be PSA--assuming its acquisition of Opel/Vauxhall goes through. That pairing has been pitched before, and PSA's enlarged presence on the Continent might give FCA an excuse to woo the company once more.

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