Chief Executive of Fiat Calls for Consolidation in Auto Industry

Published By : 30 Apr 2015 | Published By : QYRESEARCH

In his latest presentation titled “Confessions of a capital junkie”, the chief executive of Fiat Chrysler Automobiles, Sergio Marchionne, stressed on merger discussions with rival car making companies. He mentioned that compared to the amount being invested in the automobile industry, the industry has not being able to deliver equivalently. 

The car industry invests huge amounts in meeting the safety and emissions regulations. Also, meeting the rising customer demands for connectivity as well as working on self-driving technologies for future cars, the automobile industry spends massively in research and development. Mr Marchionne stated that the total industry expenditure was €122 billion in 2014, excluding the joint-ventures in China and the research activities taken by Google, Uber, and Apple. Volkswagen, the largest car maker in Europe, spent a staggering €11.5 billion on research and development activities in 2014, the highest among the car manufacturers. 

Mr Marchionne, also famous as the industry’s dealmaker, estimated that Fiat Chrysler joining another auto manufacturer would save €2.5 billion to €4.5 billion annually after a span of four years. He pointed that though there are risks attached to consolidation, the profits are hard to ignore. His company released the report on the first-quarter earnings which reflected a net profit of €92 million in the first three months of the year. It had registered a loss of €173 million during the same duration last year. The company has strongly performed in North America in the first quarter of this year. Though Mr Marchionne assured that neither he is offering to sell his company nor the company is in bad shape, industry analysts are speculating vividly. 
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