Are You Chinese And Want To Buy FCA? Be Prepared To Face Trump

Industry News

"It's pronounced 'Gina."

Only a few days ago word got out that a well-known Chinese automaker, rumored to be Great Wall Motor Co., had made an offer to buy Fiat Chrysler Automobiles (FCA), but was rejected for not being big enough. This came after it was confirmed that FCA executives had even travelled to China to meet with their Great Wall Motor Co. counterparts. There was even a Chinese delegation spotted at FCA HQ in Auburn Hills, Michigan.

And now Reuters is reporting that another Chinese automaker, Geely Automobile Holdings Ltd, has confirmed it’s not interested in making a bid for FCA, for now at least. Geely is also Volvo’s parent company, which it purchased from Ford a few years ago. It also recently bought Lotus, so it’s no stranger at buying Western car brands. However, this doesn’t mean that other Chinese automakers, typically state-owned, aren’t interested in making a bid for FCA. CEO Sergio Marchionne has gone on record many times stating his desire for industry consolidation, believing this to be vital in the coming years. Previously, he publicly and privately approached GM to discuss a possible merger, but he was turned away.

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Would You Buy a Chinese-Built Volvo?
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One Of America's Biggest Automakers Could Be Sold To The Chinese
One Of America's Biggest Automakers Could Be Sold To The Chinese

The Chinese, on the other hand, are keen to enter the highly lucrative North American auto market, and buying/merging with FCA would offer a turnkey way of doing it, so to speak. But say FCA and a Chinese automaker do reach an agreement, what then? Any merger/sale would have to be approved by US regulators, who could face political pressure from President Trump, a guy who’s made no secret of his criticism of Chinese trade practices. Only days ago Trump ordered an investigation into whether China forces US companies doing in business in China to hand over intellectual property. A potential deal could also face US public criticism as well, especially if there’s a risk of a loss of domestic manufacturing jobs.

What’s for certain is that FCA and the Chinese have talked and will very likely continue to do so with the goal of hammering out a deal. Question is whether or not that deal will be approved by the power that be in Washington, D.C.

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