A VW / FCA merger makes sense

"nermal" (nermal) 07/08/2015 at 15:35 • Filed to: mergers, not sweating in my sweater, screw you toledo

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Think about it.

FCA has wayyyyy more market share in North America, plus Ram / Jeep to hold down the market for trucks / SUVs / crossovers. VW sells a bazillion Golfs in Europe and everywhere else, in addition to having Lambo and Porsche on board to fill in at the high end. Don’t forget Audi for the luxury segment.

The two companies would fill the main product gaps that each other has. The cost savings from parts / platform sharing would be pretty sizable as well.

What could possibly go wrong?

Kanaric > nermal 07/08/2015 at 15:41

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lol it doesn’t make much sense.

You would have all the following companies selling pretty mucht he same car:

Skoda

VW

Seat

Fiat

Dodge

Audi

Chrysler

Jeep

Alfa Romeo

At that point just.. why? Might as well kill off half those brands like GM and Ford did. If they did not it would be inevitable

Tareim - V8 powered > Kanaric 07/08/2015 at 15:45

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completely agree, we’ve already got enough badge engineered cars, we don’t need anymore

Smallbear wants a modern Syclone, local Maple Leafs spammer > nermal 07/08/2015 at 15:46

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I have a friend who is a massive Chrysler fan, and hates VW. DO IT

The Ghost of Oppo > nermal 07/08/2015 at 15:47

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Remember, despite how poorly VW is doing in the US, they are still doing really well in the rest of the world. There is no way VW AG would do a merger, they would have to buy out FCA, and I highly doubt the billions and billions of dollars it would cost would be worth it, just to increase their US market share.

nermal > The Ghost of Oppo 07/08/2015 at 15:49

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That was the idea. FCAs stronghold is in NA, VW everywhere else, with a bit of crossover obviously.

Sir Halffast > nermal 07/08/2015 at 15:51

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The High Sparrow cleans up real nice.

PS9 > nermal 07/08/2015 at 15:52

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Nah. FCA shouldn’t merge with anyone, and VAG is big enough as it is. Giant organizations with multiple brands in the search for efficiency and margin have a tendancy towards homogeneity. Why make the Dart and the Golf separate cars when we can gain XX% margin on the segment by just rebranding the same car? The differences between them is what makes both interesting and valid as options, and the market is better off with more varied choices in it, but accountants and shareholders will always choose to kill that if it means making short term gains.

The Ghost of Oppo > nermal 07/08/2015 at 15:54

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Yeah, and like I said, it would not be worth BILLIONS of dollars just to increase their US market share. I highly doubt FCA is even that profitable

nermal > Kanaric 07/08/2015 at 15:55

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VW conveniently has their modular MQB platform that the new Golf uses.

A significant portion of FCAs portfolio will need to be updated soon.

The $$$ FCA would save by simply using VWs platform instead of designing a new one or updating their existing ones would be enormous.

nermal > The Ghost of Oppo 07/08/2015 at 15:56

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You’ve got the cost savings of platform sharing to consider as well.

nermal > PS9 07/08/2015 at 15:59

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That’s kinda the point. Why should FCA spend the $$$ to improve the Dart when they can badge engineer a Jetta for a lot cheaper? The increased economies of scale would theoretically lead to better products for lower cost to the end user while being more profitable.

PS9 > nermal 07/08/2015 at 16:07

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That never actually happens. When a company finds out that they can make the same or more with a bare minimum amount of investment, their product lines receive tiny inconsequential changes forever, until 1) Market forces (Read; people not putting up with premium prices for outdated products anymore) prod the company into doing something about it or 2) the company cancels the product, or on the more extreme end of the scale, the company goes out of business if that was their only offering, or they don’t react fast enough/no longer have the capital or investor interest to turn things around/are too big to fail until they aren’t anymore.

Homogeneity is not the path toward interesting and competitive products. It’s the path towards flooding the market place, dilution of brand value, self-cannibalization, and - if worse comes to worse - bailouts and bankruptcy. This is literally the business model ‘Old GM’ practiced, and we see where that went. FCA/VAG do not need to walk down the same path.

Kanaric > nermal 07/08/2015 at 16:43

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The thing is though there would be SO many redundent cars that they might be killing their own brand.

The Ghost of Oppo > nermal 07/08/2015 at 17:08

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Its not like one day they could all of a sudden be like, “okay, we are using the MQB platform now”. There is a reason it is taking VW so long to roll out MQB on other models. It costs a shit load to re-tool the manufacturing machines

duurtlang > nermal 07/08/2015 at 19:05

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Can’t we just merge FCA and GM, and retire some redundant brands? Like Chrysler, Lancia and GMC? FCA+VW makes little sense to me, VW is too huge already. FCA has little to offer VW.

pip bip - choose Corrour > nermal 07/09/2015 at 05:30

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“What could possibly go wrong?”

Sergio still having some form of control.

nermal > The Ghost of Oppo 07/09/2015 at 08:55

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Right, retooling is expensive and takes a while. But so does designing new and updated platforms.

They wouldn’t need to spend the $$$ to design a new platform is the point.

nermal > duurtlang 07/09/2015 at 08:57

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FCA and GM have too much in common.

FCA has Ram and Jeep, in addition to market share in the US that VW doesn’t.

VW has the Golf and its platform and international market share.