Hyundai, Fiat merger on cards

Daniel Fowler
July 4, 2018

Fiat Chrysler merger rumors are in the news once again, this time with Hyundai. Previous year there were rumours Hyundai and FCA were in talks for a tie-up, but FCA boss Sergio Marchionne denied the rumours.

Hyundai CEO Chung Mong-Koo is reportedly showing keen interest in FCA's share prices.

Despite previous talks of a tie-up with Hyundai past year that was dismissed by both parties as being a potential technical partnership, Hyundai said the latest gossip is unfounded.

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If Hyundai and FCA merge, the new company would be the largest automaker in the world with around 11.5 million deliveries each year. As we've seen with FCA merger rumors in the past, like when Volkswagen was considered a potential suitor, there would be critical product and manufacturing overlaps.

Spurring a decline in FCA's share price is pressure on overcapacity and a big future bill on research and development costs for electric and alternate vehicle energies that the group now lacks.

The report suggests that Fiat Chrysler's controlling families, the Elkanns and Agnellis, are eager to leave the carbuilding business behind once Marchionne steps down. EV support from Hyundai, however, would steer FCA clear of that iceberg. "That rumor is totally groundless", Hyundai Motor America, corporate spokesperson, Michael Stewart said. That would not be the case with a Hyundai-FCA merger, rumors of which first surfaced previous year. We also reached out to FCA about the rumored merger, but they declined to comment. In addition, a free-trade agreement between the United States 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.

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