VW Combining With FCA Would Be ‘Brilliant,’ Krafcik Says
11-07-14, 05:20 PM
#1
VW Combining With FCA Would Be ‘Brilliant,’ Krafcik Says
A merger of Fiat Chrysler Automobiles NV (FCAU) and Volkswagen AG (VOW) would create a well-balanced global automaker that would be highly profitable, John Krafcik, president of auto-buying website TrueCar Inc. (TRUE), said yesterday.
“This is an absolutely brilliant combination,” Krafcik, former chief executive officer of Hyundai Motor America, said in an address to the Automotive Press Association in Detroit. “For sure, these two companies have a natural attraction to each other.”
Krafcik’s assertion is based on an analysis of revenue and model mix of the companies’ U.S. businesses. Fiat Chrysler does well in sport-utility vehicle sales with its Jeep brand and has a strong Ram pickup business. VW does well in the premium car segment with Audi and has a good model line of mainstream cars, he said.
The two automakers denied they were in merger talks in July after a German magazine reported such discussions were under way. Fiat Chrysler CEO Sergio Marchionne told Bloomberg this year that a new No. 1 automaker could emerge in the future that would be larger than Toyota Motor Corp. (7203), the world’s top car company by vehicle sales.
“There is room to create one guy which will be bigger,” he said in an interview. “The industry needs it, as it’s still very fragmented.”
‘Academic Exercise’
Krafcik, a former Ford Motor Co. (F) engineering executive, said his analysis was an “academic exercise” and not based on actual insights into the two companies’ thinking. He also said Ford and VW would be a good fit, though such a combination is “highly unlikely.”
Carsten Krebs, a VW spokesman, and Gualberto Ranieri, a Fiat Chrysler spokesman, each declined to comment.
Combining Fiat Chrysler with VW is “just such a natural possibility,” Krafcik said. “It makes so much sense.”
By putting the two companies together, the new entity would derive $36 billion in U.S. revenue from sport-utility vehicles, $20.2 billion from traditional passenger cars, $17.2 billion from pickups and $14.6 billion from luxury cars, Krafcik said.
“You get a pretty interesting hypothetical company that covers all those bases pretty well,” Krafcik said.
TrueCar, which is based in Santa Monica, California, and helps customers find a fair price for vehicles they buy and sell through dealers in its network, had its initial public offering in May. The stock, which has almost doubled since its market debut, closed yesterday at $17.19.
The company is led by entrepreneur Scott Painter and counts Microsoft Corp. co-founder Paul Allen’s Vulcan Capital as an investor.
“This is an absolutely brilliant combination,” Krafcik, former chief executive officer of Hyundai Motor America, said in an address to the Automotive Press Association in Detroit. “For sure, these two companies have a natural attraction to each other.”
Krafcik’s assertion is based on an analysis of revenue and model mix of the companies’ U.S. businesses. Fiat Chrysler does well in sport-utility vehicle sales with its Jeep brand and has a strong Ram pickup business. VW does well in the premium car segment with Audi and has a good model line of mainstream cars, he said.
The two automakers denied they were in merger talks in July after a German magazine reported such discussions were under way. Fiat Chrysler CEO Sergio Marchionne told Bloomberg this year that a new No. 1 automaker could emerge in the future that would be larger than Toyota Motor Corp. (7203), the world’s top car company by vehicle sales.
“There is room to create one guy which will be bigger,” he said in an interview. “The industry needs it, as it’s still very fragmented.”
‘Academic Exercise’
Krafcik, a former Ford Motor Co. (F) engineering executive, said his analysis was an “academic exercise” and not based on actual insights into the two companies’ thinking. He also said Ford and VW would be a good fit, though such a combination is “highly unlikely.”
Carsten Krebs, a VW spokesman, and Gualberto Ranieri, a Fiat Chrysler spokesman, each declined to comment.
Combining Fiat Chrysler with VW is “just such a natural possibility,” Krafcik said. “It makes so much sense.”
By putting the two companies together, the new entity would derive $36 billion in U.S. revenue from sport-utility vehicles, $20.2 billion from traditional passenger cars, $17.2 billion from pickups and $14.6 billion from luxury cars, Krafcik said.
“You get a pretty interesting hypothetical company that covers all those bases pretty well,” Krafcik said.
TrueCar, which is based in Santa Monica, California, and helps customers find a fair price for vehicles they buy and sell through dealers in its network, had its initial public offering in May. The stock, which has almost doubled since its market debut, closed yesterday at $17.19.
The company is led by entrepreneur Scott Painter and counts Microsoft Corp. co-founder Paul Allen’s Vulcan Capital as an investor.
11-08-14, 02:24 AM
#2
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VAG is not big enough? If with their size and product portfolio they cannot beat TMC, it means FCA will be of no help. Whatever, kill Alfa Romeo and give it to me, I'll bring it back to life.
11-08-14, 08:09 AM
#3
Lexus Champion
VW had set 2018 as the year when they would reach their goal of becoming the world's largest auto manufacturer but they have not been doing so well; their sales in the USA are still low and they know that to be able to beat Toyota and GM, they must do better in this market, the world's largest.
There has also been a lot of bickering between VW and Fiat, with no love lost between Marchionne (at Fiat) and Winterkorn (at VW). VW has talked about swallowing Fiat and Fiat has talked about taking on VW. They both have their eyes on retiring with a large legacy, some combined VW - Fiat monster. Both hide it by saying that only large conglomerates will survive into the future, especially in over-crowded Europe where neither GM nor Ford are doing that well but being kept afloat by Detroit.
There has also been a lot of bickering between VW and Fiat, with no love lost between Marchionne (at Fiat) and Winterkorn (at VW). VW has talked about swallowing Fiat and Fiat has talked about taking on VW. They both have their eyes on retiring with a large legacy, some combined VW - Fiat monster. Both hide it by saying that only large conglomerates will survive into the future, especially in over-crowded Europe where neither GM nor Ford are doing that well but being kept afloat by Detroit.
11-08-14, 08:21 AM
#4
VW had set 2018 as the year when they would reach their goal of becoming the world's largest auto manufacturer but they have not been doing so well; their sales in the USA are still low and they know that to be able to beat Toyota and GM, they must do better in this market, the world's largest.
There has also been a lot of bickering between VW and Fiat, with no love lost between Marchionne (at Fiat) and Winterkorn (at VW). VW has talked about swallowing Fiat and Fiat has talked about taking on VW. They both have their eyes on retiring with a large legacy, some combined VW - Fiat monster. Both hide it by saying that only large conglomerates will survive into the future, especially in over-crowded Europe where neither GM nor Ford are doing that well but being kept afloat by Detroit.
There has also been a lot of bickering between VW and Fiat, with no love lost between Marchionne (at Fiat) and Winterkorn (at VW). VW has talked about swallowing Fiat and Fiat has talked about taking on VW. They both have their eyes on retiring with a large legacy, some combined VW - Fiat monster. Both hide it by saying that only large conglomerates will survive into the future, especially in over-crowded Europe where neither GM nor Ford are doing that well but being kept afloat by Detroit.
They tried to buy Suzuki but that did not go well. FCA wont go well either.
However, their ultimate goal is #1, that is very important to VW for some reason. For the past 4 years, they have been announcing to European PR outlets how "this" year they will be #1. Even this year, lots of European agencies reported how it is likely for VW to overtake Toyota. Same last year, and in 2011 they announced being #1 and it turned out that they missed by a lot.
It is very important goal for them and they will buy more brands to do it.
On the other hand, I dont think it is nearly as important to Toyota... they prefer operating profit, which is almost 50% higher than VW's.
11-08-14, 05:00 PM
#7
Lexus Champion
I don't see Chrysler and VW as a good fit. Daimler tried it but failed. And I don't see the Italians working that well with the Germans either; 2 completely different cultures.
However, their ultimate goal is #1, that is very important to VW for some reason. For the past 4 years, they have been announcing to European PR outlets how "this" year they will be #1. Even this year, lots of European agencies reported how it is likely for VW to overtake Toyota. Same last year, and in 2011 they announced being #1 and it turned out that they missed by a lot.
It is very important goal for them and they will buy more brands to do it.
It is very important goal for them and they will buy more brands to do it.
I agree, and yet by concentrating on operating profit rather than growth and acquisitions to become and stay #1, Toyota stays there as #1.
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11-08-14, 11:04 PM
#9
Lexus Test Driver
Bad idea. One company that has a shoddy reliability record combined with another company that has even worse reliability equals crap.
11-10-14, 10:22 AM
#10
I think a more interesting move would be, TMC buying BMW. These two really appeal to different segments. Most consumers (excluding car forum participants, which are a minority!) would not even know. Both companies have made great sports cars, and both make some pretty dull cars at the moment. The individuality and catering-to-order of BMW would be a good match for the deep capital pockets, ability to move volume, and attention to quality of TMC.
It would merge two extremely different cultures, but that's what the J-factor is all about, ya?
It would merge two extremely different cultures, but that's what the J-factor is all about, ya?
11-10-14, 10:31 AM
#11
Lexus Champion
I can somewhat see that.
In fact, VW Germany is very strict with regards to newly-launched markets........such as here in the Philippines.
In fact, VW Germany will only approve request for certain models and/or variants if they can meet GUARANTEED 100 units a month bare minimum (and for a low-income Philippine market, that is tough).
This means that price/features ratio mix is very tight and not much room to go ambitious.
This is the reason why we're not given the green-light to launch the Scirocco R here or why our Touareg only comes with Manual Seats
In fact, VW Germany is very strict with regards to newly-launched markets........such as here in the Philippines.
In fact, VW Germany will only approve request for certain models and/or variants if they can meet GUARANTEED 100 units a month bare minimum (and for a low-income Philippine market, that is tough).
This means that price/features ratio mix is very tight and not much room to go ambitious.
This is the reason why we're not given the green-light to launch the Scirocco R here or why our Touareg only comes with Manual Seats
11-10-14, 12:18 PM
#12
Formerly Bad Co
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Eventually they will start sharing tech, and hardware. Which means there will be no differentiation between cars because they will all be built with one philosophy in mind.
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