Company mergers in the modern automotive industry has become a common practice. More and more specialists declare that the auto industry should consolidate further to cope with rising development costs. As thus, Fiat Chrysler Automobiles Chairman John Elkann renewed a push to merge the company with one of the auto industry’s “big guys”, saying savings could top $10 billion a year.
Even with developments like car sharing and self-driving vehicles, Fiat Chrysler’s major competitors should consider the potential benefits of a merger because the bulk of their business through 2030 will remain selling cars to individuals. According to Elkann, the savings figure from combining “starts to become very interesting” when looked at over the long term. After calling off efforts to push General Motors into a deal, Fiat Chrysler CEO Sergio Marchionne has made investment and restructuring. His most challenging goal will be to turn Fiat Chrysler’s 5 billion euros in net industrial debt into a cash pile of at least 4 billion euros.
Marchionne, who formed the company by combining Italian vehicle maker Fiat with U.S. counterpart Chrysler, contends that the expansion program will put the manufacturer in a better position to strike a deal down the line. Citing figures from consultant McKinsey & Co, Elkann predicted industry revenue from new car sales will increase to $4 trillion in 2030 from $2.75 trillion in 2015.
