Fiat SpA Chief Executive Officer Sergio Marchionne predicts that the next European car merger will involve PSA Peugeot Citroen, France's largest auto manufacturer.
"The next merger will probably be French," Marchionne, who also runs Chrysler Group LLC, told reporters in Rome today. "They tried with Mitsubishi and they will try with someone else."
Peugeot, Europe's No. 2 carmaker, last month broke off talks on an equity swap with Mitsubishi Motors Corp. and vowed to deepen cooperation without one. In a move that contrasts with Paris-based Peugeot's standalone strategy, domestic rival Renault SA and its Japanese affiliate Nissan Motor Co. announced a 3.1 percent stake swap with Daimler AG on April 7 to underpin a broad cooperation accord.
Hugues Dufour, a Peugeot spokesman, declined to respond to the Fiat CEO's remarks.
Fiat received 20 percent of Chrysler in June as part of a deal to help the Auburn Hills, Michigan-based carmaker emerge from bankruptcy. Five months earlier, Marchionne said that many in the auto industry viewed a Fiat-Peugeot combination as a "marriage made in heaven," adding that the Chrysler stake purchase would be just the first step in his consolidation strategy for the Italian company.
"A Fiat-Peugeot tie-up has an industrial logic and a shareholder logic," London-based UBS analyst Philippe Houchois said in an interview today.
Building Scale
Fiat, based in Turin, Italy, makes about 2 million cars annually, while Chrysler manufactured 1.3 million last year. That's short of Marchionne's contention that to survive as a global automaker, a company needs production of at least 5 million cars. Peugeot sold 3.2 million vehicles last year.
"The question for Fiat is whether Chrysler is enough for scale -- our view is that it's not, and that's where Peugeot comes in," said Houchois, who rates Peugeot shares "buy" and Fiat "neutral."
Marchionne, 57, was in Rome today to present the new Alfa Romeo Giulietta to President Giorgio Napolitano and Italian government officials.
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