Only a month ago, the automotive world was abuzz when a rumor came out that a Chinese automaker had a put in a bid for Fiat Chrysler Automobiles. We also learned about four possible Chinese automakers that were supposedly interested. But after this rumor came out, most of the Chinese automakers stepped back and said they were not interested. The only one that expressed some interest was Great Wall, but only for Jeep. Since then, they have taken a few steps back.
It seems no one is interested in FCA, a fact that was confirmed by CEO Sergio Marchionne.
According to Reuters, Marchionne said no when asked about if FCA was approached by someone or there was an offer on the table. Lord knows that Marchionne has tried to get someone interested in picking up FCA with such attempts as trying to sell GM's CEO Mary Barra on the idea or Volkswagen. Still, Marchionne isn't giving up. He said the company is working on a plan to “purify” (or streamline) its portfolio.
“There are activities within the group that do not belong to a car manufacturer, for example, the components businesses. The group needs to be cleared of those things,” Marchionne said.
What will not be leaving FCA's portfolio is Alfa Romeo and Maserati. Last month, a rumor came out that FCA was considering spinning off Alfa Romeo and Maserati into their own separate company.
“The way we see it now, it’s almost impossible, if not impossible, to see a spin-off of Alfa Romeo/Maserati, these are two entities that are immature and in a development phase,” said Marchionne.
“It’s the wrong moment, we are not in a condition to do it.”
That last line might be the understatement of the decade.
Earlier this week, Chinese automaker Great Wall announced its intentions of possibly buying Jeep. It was hoping to make contact with Fiat Chrysler Automobiles about starting negotiations. But just a day later, Great Wall has poured a bucket of cold water on their plans.
In a recent filing to the Shanghai stock exchange, Great Wall said there are “big uncertainties” with FCA and isn't sure if it will continue investigating it. The company also stated they have not made any contact with Fiat's board.
"The company has not built any relationship with the directors of FCA nor has the company entered into any discussion or signed any agreements with any officer of FCA so far," Great Wall said in the filing.
On this news, Great Wall's share price went into freefall on Tuesday that the Shanghai stock exchange put a halt on trading.
Analysts find it hard to see FCA selling Jeep alone, as it is the crown jewel in their lineup. There are also the concerns of getting government approval. A recent report from Deutsche Bank AG said Great Wall could run into issues with getting approval from the Chinese government as restrictions have been placed on capital outflow. There is also the political ramifications in the U.S. due to President Donald Trump.
Source: Bloomberg, Reuters
It is no secret that Sergio Marchionne has been looking for a buyer to take on Fiat Chrysler Automobiles for the past two years. But no one seemed seriously interested.
That has changed.
Automotive News has learned from various sources that a number of Chinese automakers are conducting appraisals into FCA, with some meeting with representatives of U.S. retail groups about a potential acquisition last week. One source revealed that FCA executives have traveled to China to meet with Great Wall Motor Co. and that Chinese delegations were at FCA's HQ. AN also reports that a well-known Chinese automaker has put forth an offer this month for the company, but was turned down as it wasn't enough money to do a sale.
It is unclear which Chinese automakers are looking at FCA. Aside from Great Wall, sources say Dongfeng Motor Corp., Zhejiang Geely Holding Group, and Guangzhou Automobile Group (FCA's joint venture partner in China) are interested. Unsurprisingly, FCA and the Chinese automakers are keeping their mouths shut.
Why are Chinese automakers suddenly interested in FCA? Part of it comes from the government putting pressure on companies to expand beyond China. A government directive called China Outbound is pushing Chinese companies "to acquire international assets from their industries and operate them "to make their mark."
"Right now, Chinese automakers enjoy the full support of the leadership in Beijing to go and make it happen. That's something brand new, and it's really picked up since 2015," said Michael Dunne, president of Dunne Automotive based in Hong Kong.
A key example is Geely acquiring Volvo back in 2010.
Also, FCA provides Chinese Automakers wanting to enter the U.S. something akin to a turnkey operation. FCA has about 2,600 dealers in the U.S., along with extensive networks in Canada and Mexico. Worldwide, FCA has 162 manufacturing operations and 87 research and development centers - something that would appeal to Chinese Automakers.
So if a deal was worked out, what would a Chinese Automaker be getting? According to a source, the sale would include Jeep and Ram Trucks - FCA's profit makers, along with Chrysler, Dodge, and Fiat. Alfa Romeo and Maserati would be spun off to maximize returns for Exor - holding company controlled by Agnelli family which holds a controlling interest in FCA.
Source: Automotive News (Subscription Required)
General Motors and PSA Group completed the sale of Opel/Vauxhall yesterday, effectively ending the era of GM’s European division.
“It is a historic day. We are proud to join Groupe PSA and are now opening a new chapter in our history after 88 years with General Motors. We will continue our path of making technology `made in Germany´ available to everyone. The combination of our strengths will enable us to turn Opel and Vauxhall into a profitable and self-funded business. We have set ourselves the clear target of returning to profitability by 2020,” said Opel Automobile GmbH CEO Michael Lohscheller.
As part of the sale, PSA Group paid 1.53 billion for the Opel and Vauxhall brands and $1.06 billion for the European arm of GM Financial. GM is still on the hook for existing pension obligations for Opel - estimated to be around $3.54 billion.
The final part of the sale also marks some key changes of Opel and Vauxhall's leadership. Four new people - Christian Müller, Rémi Girardon, Philippe de Rovira, and Michelle Wen - will be joining the company's management.
What happens next? The new management team will begin working on a new plan for the future of the two brands. The ultimate goal is to have Opel and Vauxhall return to profitability by 2020.
Source: Reuters, Opel
Press Release is on Page 2
Birth of a European Champion: Opel and Vauxhall join Groupe PSA
Opel and Vauxhall to be operated as true iconic German and British brands
New performance plan to be presented in 100 days: to generate a positive operational free cash flow by 2020 as well as an operating margin of 2% by 2020 and 6% by 2026
Four new team members to join the leadership team
Rüsselsheim. The sale of Opel Automobile GmbH with its brands Opel and Vauxhall by General Motors to Groupe PSA has been finalized now. “It is a historic day,” said Opel Automobile GmbH CEO Michael Lohscheller. “We are proud to join Groupe PSA and are now opening a new chapter in our history after 88 years with General Motors. We will continue our path of making technology `made in Germany´ available to everyone. The combination of our strengths will enable us to turn Opel and Vauxhall into a profitable and self-funded business. We have set ourselves the clear target of returning to profitability by 2020.”
“We are witnessing the birth of a true European champion today,” emphasized PSA Chairman of the board Carlos Tavares. “We will assist Opel and Vauxhall’s return to profitability and aim to set new industry benchmarks together. We will unleash the power of these iconic brands and the huge potential of its existing talents. Opel will remain German, Vauxhall will remain British. They are the perfect fit to our existing portfolio of French brands Peugeot, Citroën and DS Automobiles.” The market share of the enlarged Groupe PSA is now around 17 percent in Europe, making it the continent’s second largest carmaker with first or second place in main markets.
As already assured when the contract was signed in March, all employee codetermination rights will remain unchanged.
The Opel/Vauxhall management team will work on a plan for the future in the next 100 days. “We are eager to build the plan with PSA’s support and obviously together with our partners from the Works Council and the unions,” said Opel CEO Lohscheller. Synergies within the Groupe PSA, for example in purchasing and development, are set to play a major part. The combined entity will unlock substantial economies of scale and synergies in purchasing, manufacturing and R&D estimated at €1.7 Bn at run rate. The goal is to generate a positive operational free cash flow by 2020 as well as an operating margin of two percent by 2020 and six percent by 2026.
Today’s start of a new era is accompanied by some important leadership changes. “I am happy to announce that four new members will join my management team,” said CEO Lohscheller:
Christian Müller, previously Vice President Global Propulsion Systems – Europe and with Opel since 1996, will succeed William F. Bertagni as Vice President Engineering. He will integrate engineering and powertrain in one department.
Rémi Girardon, previously Senior Vice President Group Industrial Strategy at Groupe PSA, will succeed Philip R. Kienle as Vice President Manufacturing.
Philippe de Rovira, previously Group Controller at Groupe PSA, will become the new CFO of Opel, following Michael Lohscheller.
Michelle Wen, Group Supply Chain Management Network Director at Vodafone Procurement, will be joining the Opel leadership team effective September 1 replacing Katherine Worthen currently Vice President Purchasing and Supply Chain. All other moves are with immediate effect.
“We thank Katherine Worthen, William F. Bertagni and Philip Kienle for all their contributions to Opel/Vauxhall and wish them all the best for the next chapter of their careers within General Motors,” said Opel CEO Lohscheller. “And we cordially welcome Michelle Wen from Vodafone as well as Remi Girardon and Philippe de Rovira from Groupe PSA. I am looking forward to working with these new team members who will reinforce the potential of our leadership team.”
Going forward, Michael Lohscheller is planning with a much leaner management structure, including the number of direct reports. “We are reducing complexity and increasing speed,” said Lohscheller. “I am looking forward to shaping the next chapter of Opel/Vauxhall with the new management team and leading our company into a successful future. The owners and the employees will not be the only ones to benefit from ever stronger Opel and Vauxhall brands – our customers will do so too.”
PSA and Opel/Vauxhall have been working together since 2012. The cooperation so far includes four vehicles from Opel. The first model, the Opel Crossland X, has been available at dealerships since the end of June. The Opel Grandland X SUV in the next higher segment follows in the fall. The successor of the Opel Combo light commercial vehicle will come onto the market next year and as of 2019 the next generation of the best-selling Opel Corsa will be launched.
Opel/Vauxhall and Groupe PSA will continue to work with General Motors in the future. In addition to development in the area of electric propulsion, Opel plants will continue to produce vehicles for the GM brands Buick and Holden.
In parallel, the acquisition of GM Financial's European operations is under way, subject to validation by the different regulatory authorities’ review and is scheduled for the second half of 2017.
If General Motors and PSA Group were hoping to have a smooth sale of Opel, they were dashed this week.
Both Automobilwoche and German newspaper Allgemeine Zeitung report Opel's work council and German labor union IG Metall have some specific demands for workers at Opel's development center in Rüsselsheim. The two parties want a guarantee that 7,700 workers will keep their jobs at the center and that continue performing work for GM until 2020 - which could account for 30 percent of the development center's output.
There are also some disagreements on vehicle development. PSA Group wants the next-generation Corsa subcompact to use one their platforms, while Opel wants to keep the current platform and also wants to develop an SUV based on the Insignia platform.
Until this issue can get resolved, GM and PSA Group cannot move forward with the Opel sale. Originally, GM was planning to move their European assets into a new company titled Opel Automobile GmbH. But plans for this have been postponed.
"Only when these service contracts are signed and the new ITEZ contract is signed can the business transition come," an insider told Allgemeine Zeitung.
A spokeswoman for the works council told Automobilwoche that there was no disagreement between the various parties on this issue. But the complexity of this matter has pushed back plans for workers to ratify the agreement.
Information sessions about the agreement that were supposed to take place this week have been reportedly canceled.
Source: Automobilwoche, Allgemeine Zeitung