FCA And VW Merger Gets Green Light: Here’s What We Can Expect

Industry News

This is a deal of massive proportions and will make cars from both automakers better than ever.

Volkswagen has been a bit of a powerhouse in the industry, proving that even when it’s saddled with perhaps one of the largest publicity-killing scandals in recent memory, it can still pull ahead and rank as the the number one automaker in the world. While Volkswagen is under no threat of having its spot as world's largest automaker revoked by PSA's recent takeover of Opel and Vauxhall, it has had its first place grip on the European auto market encroached upon.

Fiat Chrysler Automobiles CEO Sergio Marchionne had used this reasoning to try and convince Volkswagen to move on a merger between the two auto companies after being vocal about wanting to find a partner to split the high development costs that are on the horizon as electric drivetrains and autonomous vehicles become the norm. It appears that Volkswagen has listened because both FCA and Volkswagen have announced a merger. A merger of this size is a big deal and will help Volkswagen carve out a firm lead over the Toyota, which comes in at a close second against Volkswagen. In 2016, FCA ranked as the 8th largest automaker in the world. As it stands, the deal will benefit both automakers hugely.

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Volkswagen, already the owner of 12 vehicle brands, has plenty of experience sharing components to save costs but not overdoing it as to foster variety within its subsidiary portfolio. Volkswagen has also started down the path of electrification with new platforms, batteries, and drivetrains under development. FCA could have access to all of this technology, saving it billions in R & D costs. Taking a place under Volkswagen’s wing also gives FCA the comfort that its debt crisis can be absolved by its larger and wealthier parent company. In exchange, Volkswagen will have access to FCA’s brands, which include Fiat, Chrysler, Ram, Jeep, Dodge, Alfa Romeo, and Maserati.

While FCA may not be on the cutting edge of technology, it can now offer Volkswagen its breadth of experience in the highly profitable American truck industry, a notoriously hard case for foreign automakers to crack. The opportunities are endless here, so be sure to pop a bottle of champagne along with Marchionne and Volkswagen CEO Matthias Mueller because the cars we can expect out of this powerhouse combo should be nothing short of stunning.

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