VW, Fiat deny merger talks

Thu, 17 Jul 2014

All parties involved are actively denying a potentially Earth-shattering shakeup in the automotive universe, as a German business publication claimed that Volkswagen and Fiat have been discussing the possibility of a merger.

The magazine, Manager Magazin, claimed that Fiat was looking to ditch its volume automotive business in order to focus even more heavily on Ferrari, according to Automotive News Europe. The report claims that the merger would allow Chrysler to help bolster the Volkswagen brand in the United States.

Not surprisingly, Volkswagen, Fiat and the Agnelli family (which owns a 30-percent stake in FCA) have all denied this report. VW has said it's focusing on efficiency within its own group, and isn't looking at any takeover plans, according to AN. The Agnelli family, meanwhile, has also denied talks, while Fiat officials say are unaware of any talks.

That hasn't stopped some analysts from speculating that a merger between the two companies might not be a horrible idea, although any potential deal likely wouldn't be a full-scale merger, so much as a piecemeal plundering.

"Volkswagen has an urge to become the number one global automaker, and an acquisition of that size would bring them to their target immediately," Juergen Pieper, an analyst with Frankfurt-based Bankhaus Metzler, told AN. Pieper cautioned, however, that due to Fiat's troubles in Europe and the potential for antitrust woes in South America that a full-scale merger would be "rather unrealistic."

As for the Manager Magazin report, Chrysler might not be able to help VW quite as much as the German publication thinks.

VW's issues "are more image and pricing problems and not so much problems of distribution and manufacturing," an unnamed auto analyst told AN. "Buying Chrysler would not really help VW."

Of course, should we hear anything else on this fascinating rumor, we'll be sure to check it out. Stay tuned.

By Brandon Turkus