Rumours are once again swirling about a possible tie-up between Hyundai and Fiat Chrysler Automobiles. According to the 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.
Marchionne has expressed his desire for FCA to merge with another automaker. He lobbied hard for a tie-up with General Motors and reportedly explored hookups with many other companies, including PSA and Chinese firms.
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.
Source: Asia Times