According to Asia Times citing unnamed sources, Hyundai Motor Group CEO Chung Mong-Koo is watching FCA’s stock closely and allegedly intends to buy enough shares to take over the rival automaker. The insiders indicate that Hyundai would launch its purchase sometime before Sergio Marchionne leaves FCA next year.
With Marchionne gone, there will be a vacuum at the top of FCA. According to these insiders, company chairman and major shareholder John Elkann doesn’t have much interest in running the automaker, so he could see a merger as an attractive alternative.
Hyundai could be an especially good partner. FCA is currently relatively weak in the Asian region, where Hyundai has a strong base. In addition, a free-trade agreement between the United Staes and South Korea would make transporting models between the countries a more economical process – especially in light of the possibility of higher tariffs on imported vehicles from the European Union. The closer political ties between the U.S. and South Korea might make the merger more palatable for regulators in the countries.
Speculation about a Hyundai-FCA merger popped up last year when the South Korean company allegedly expressed interest in the tie-up. Officials from both sides, including Marchionne, publicly denied the reports. Later, the firms said they were negotiating a possible technical partnership on transmissions and hydrogen tech.
Sergio Marchionne had previously sought tie-ups with General Motors and Volkswagen. The Italian-Canadian executive also explored a tie-up with China’s Great Wall Motor Co., but this was never considered to be a viable option, Asia Times says. Instead, Marchionne simply feigned interest in a merger with the Chinese company to put the pressure on Hyundai, knowing the South Korean automotive giant was also interested in the company.
If Hyundai and FCA merge, the new company would immediately become the world’s largest automaker with around 11.5 million worldwide deliveries each year.