Fiat Chrysler Automobiles NV (NYSE:FCAU) has again stuck its eyes on the rich asset of the General Motors Company (NYSE:GM) in an attempt to improve profit margins and increase its exposure in market. The CEO, Sergio Marchionne, isn’t giving up on this rich asset. According to CEO the combination could potentially raise profit margins to $28 billion to $30 billion annually before taxes and other deductions, based on Automotive News reports.
“Look, the combined entity can make $30 billion a year in cash. Thirty. Just think about that [expletive] number,” Marchionne told the publication. “In steady-state environments, it’ll make me $28 to $30 billion,” at a seasonally adjusted annual selling rate of 17 million new cars and trucks in the U.S.
Earlier this year the Italian-American company approached the Detroit automaker for possible merger talks but the GM CEO, Mary Barra, has rejected this proposal and said that GM has no interest in merging with the FCA.
“We already have scale and we are leveraging that scale,” Barra said in June. “When you look at the last several years we have been merging with ourselves.”
While looking into the matter it seems that if FCA somehow will be able to convince GM then it would be a great success for the company as the merger would boost its market presence as well as add skillful expertise to FCA portfolio.
But the worry for the Marchionne is that FCA is much smaller firm than the GM with market capitalization of $20 billion, while GM is worth $57 billion firm. FCA is the World’s seventh largest carmaker while GM is among the top three automakers.
Marchionne said that he hasn’t any intentions of hostile deal with the GM further saying automaker’s board and executives cannot avoid a discussion of the potential cost savings.
“Not hostile,” he told the publication. “There are varying degrees of hugs. I can hug you nicely, I can hug you tightly, I can hug you like a bear, I can really hug you. Everything starts with physical contact. Then it can degrade, but it starts with physical contact.”
