The potential merits of Volkswagen buying Fiat, Chrysler and Alfa

The potential merits of Volkswagen buying Fiat, Chrysler and Alfa

Fiat has denied rumours that it’s been in discussions with VW about the sale of Fiat, Chrysler and Alfa, but such a plan could benefit all involved

Interesting news has been emerging, from Germany’s Manager Magazin, that the VW Group has been talking to Fiat about buying Fiat, Chrysler and Alfa.

Firstly let’s be clear that Fiat has flatly denied it and company boss Sergio Marchionne has mentioned to us many times that ‘he talks to other car companies all of the time’.

It does though make some sense to both parties. Volkswagen supremo Ferdinand Piech would finally get his hands on Alfa Romeo (and wouldn’t we like to see what VW engineers could do with that).

More importantly, VW would get the scale and dealer network it badly needs to properly conquer America and so achieve its ambition to be world number one by 2018.

Fiat’s parent company would be left with Ferrari, Maserati and Jeep – or all of the profitable bits if you like. And would so be transformed into a sort of Italian Jaguar Land Rover.

But there’s danger in losing the sort of scale and leverage that being part of a bigger group provides – in all sorts of ways, especially for parts and development costs.

So do we think this will happen? Probably not, especially as VW CEO Martin Winterkorn is also talk about taking cost out of the business and aiming for the sort of profit margins Toyota enjoys.

That doesn’t mean it couldn’t happen, however.

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