In a letter to his investment company’s shareholders, Fiat Chrysler Automobiles Chairman John Elkann has said that he sees the need for more combinations in the auto industry and that he expects consolidation in the sector to continue.
“Hopefully this will be driven by reason and common sense rather than by crisis,” Elkann, 39, Chairman of Exor SpA, said in his annual letter to the investment company’s shareholders.
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Controlled by the Agnelli family, Exor owns 29.2 percent of Fiat Chrysler and 44.3 percent of its voting rights. Elkann said industry mergers should take into account the importance of identity and culture, “avoiding the all too typical divisive trappings of a takeover”.
He also noted the efficiency gains for Fiat that have followed the creation of FCA. “We have learned how much capital can be saved by working with the greater volumes of FCA today as opposed to those of only Fiat in the past. For example the 500X and Jeep Renegade are very different cars, but they are manufactured in the same plant and share R&D, which reduces the total investment required by EUR1billion.”
He went on to say in his note that FCA has taken account of identity and culture. “Hopefully this [consolidation] will be driven by reason and common sense rather than by crisis and will take into account the importance of identity and culture, as we have done, avoiding the all too typical divisive trappings of a takeover and creating instead a shared transnational culture. This is one of the most important lessons learned from combining Fiat and Chrysler to create FCA.”
FCA is widely thought to be evaluating further potential partners to further leverage scale economies globally.
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