China’s Great Wall confirms interest in Fiat Chrysler
SHANGHAI: A direct overture by Chinese automaker Great Wall Motor to Italian-American automaker Fiat Chrysler Automobiles (FCA) sent FCA shares up sharply on Monday, as investors cheered the potential sale of the storied Jeep brand.
It was not immediately clear whether Great Wall Motor wanted all or part of FCA.
Automotive News first reported earlier on Monday that Great Wall Motor’s President, Wang Fengying, plans to contact FCA to discuss acquiring the Jeep brand.
“With respect to this case, we currently have an intention to acquire. We are interested in (FCA),” an official at Great Wall Motor’s press relations department told Reuters. He declined to give his name and gave no further details.
Twopeoplefamiliarwiththematter said Great Wall Motor had asked for a meeting with FCA to make an offer for all or part of the group.
FCA, which is incorporated in the Netherlands and based in London, said in a statement it had not been approached by Great Wall Motor, and was implementing its current business plan. Its main investor, Italy’s Agnelli family, declined to comment.
Rising cost
FCA Chief Executive Sergio Marchionne has said that he wants to find a partner or buyer for the world’s seventh-largest automaker as costs rise to comply with emissions regulations and develop technology for electric and self-driving cars.
So far, however, Marchionne and company chairman John Elkann have not opened the door to selling Jeep or the profitable Ram truck business in North America as standalone units.
If Marchionne is willing to sell Jeep on its own, other automakers like Volkswagen, General Motors or Ford Motor might show interest, analysts said.
Jefferies said in a research note last week that a key question of a Chinese acquisition of some or all of Fiat Chrysler is the “political feasibility of such a transaction given (automaker mergers and acquisition) is often held to a different standard in the current political environment.”
But Jefferies noted “Chrysler’s background which has included multiple changes of ownership, including two foreign acquirers” in two decades.
Jeep sales
Jeep targets sales of 2 million vehicles in 2018 worldwide, up from 1.4 million in 2016. Marchionne has said deliveries from the SUV brand could eventually rise to as many as 7 million a year.
Great Wall Motor, China’s largest sport utility vehicle (SUV) and pickup manufacturer, would be making an audacious move in taking on FCA, which has a market value of more $20 billion after a 48 per cent run-up this year.
If Great Wall, with a market value of about $16 billion, bought FCA it would be China’s largest overseas automotive industry deal to date — dwarfing Geely’s 2010 billion acquisition of Volvo cars. A formal offer by Great Wall for Jeep would put in play a brand that was once a symbol of US military power, and now epitomizes American myths of freedom and adventure, at a time of heightened trade friction between Washington and Beijing.
Jeep became a flashpoint in the 2012 US presidential election when then-Republican candidate Mitt Romney ran advertisements in Ohio claiming that FCA was considering moving production of Jeep models out of the state. Fiat Chrysler said Jeep production would not be moved to China from the United States, although the company did begin building Jeeps in China for the Chinese market.
This year, US government officials have intensified scrutiny of Chinese acquisitions of US assets.
It is not clear if a Chinese bid for FCA or Jeep would face scrutiny from the Committee on Foreign Investment in the United States (CFIUS), which reviews acquisitions by foreign entities for potential national security risks, experts said. -