New deal could come as a huge benefit for struggling FCA

Fiat Chrysler Automobile’s head honcho, Sergio Marchionne, recently revealed that FCA could team up with Korean electronics giant Samsung. The news arrives alongside rumors that FCA is shopping for buyers for Magneti Marelli, FCA’s auto parts subsidiary.

In a recent interview with Bloomberg, Marchionne said, “We have a very good relationship with Samsung, both as a supplier and as a potential strategic partner.” Marchionne went on to say he has a good relationship with Samsung Vice Chairman Lee Jae Yong, who serves on the board of Exor SpA together with Marchionne.

So far, talks regarding Samsung’s purchase of Magneti Marelli have yet to be confirmed, but citing unnamed sources familiar with the matter, Automotive News reports that “some or all of the Marelli operations” are currently on the negotiating table with Samsung.

Magneti Marelli was founded in 1919, and has facilities in 19 different countries, employing roughly 40,000 workers. The company produces vehicle safety system components, powertrain systems, vehicle electronics, suspension systems, and exhausts. It also provides the electronics for Formula One and the World Rally Championship.

Samsung is reportedly most interested in Marelli’s lighting, in-car entertainment, and telematics systems.

According to Bloomberg, the deal could be worth as much as $3 billion.

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Why It Matters

The first thing that crossed my mind when reading this headline was, “Marchionne really, really wants a partner for FCA.” You may remember his very public interest in a merger with General Motors, a proposal that was rejected and ended up denting FCA’s financial standing.

Nonetheless, Marchionne maintains he’s all about consolidation, and working with Samsung could help FCA immensely in the future, especially when it comes to the next big automotive tech revolution – autonomous cars.

The automaker is already reportedly collaborating with Google to create an autonomous variant of the Pacifica minivan, so obviously, the interest is there.

Alternatively, FCA could simply end up simply selling off Marelli, which would provide the struggling automaker with a much-needed infusion of funds. Currently, FCA is on unsteady ground, and Marchionne says his primary concern is reducing the company’s debt and settling its finances for future growth. What’s more, the current CEO is slated to leave FCA by 2019, which means several billion dollars from Samsung would take FCA a lot closer to that goal.

That said, Marelli won’t go cheap. Marchionne said that the auto parts producer “is going to provide a significant platform for technology development,” which might hint at its inclusion in future autonomous vehicles from FCA.

Conversely, Samsung seems eager to get into the automotive game, especially with rivals like Apple already making strides.

We’ll see where this all ends up. Stay tuned for more.

Source: Automotive News

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