Car Industry

Hyundai claims FCA buyout rumor is ‘totally groundless’

A merger would mostly benefit FCA, but would skyrocket Hyundai to become the world's largest automaker.

Chris Paukert/Roadshow

Over the past year Fiat Chrysler Automobiles CEO Sergio Marchionne has been courting other automakers with merger proposals to help keep the company on a solid footing past the FCA head's planned departure in May 2019. This week consolidation rumors are in the news once again: this time with Hyundai. The South Korean automaker can help fill some gaps in FCA's current product planning, and according to unnamed sources cited by the Asia Times, Hyundai Motor Group CEO Chung Mong-koo, pending an expected decline in FCA's stock price, intends to motion for a takeover.

If a Hyundai-FCA merger were to happen — perhaps as soon as this summer, and almost certainly before Marchionne departs next year — the deal would create the world's largest automaker. That's not the only advantage for both parties. As we've seen with FCA merger rumors in the past, like when Volkswagen was considered a potential suitor, there would be critical product and manufacturing redundancies. That would not be the case with a Hyundai-FCA merger, rumors of which first surfaced last year.

Perhaps most advantageous of all, for FCA at least, is that it has virtually no electric vehicle strategy. That could mean disaster for Fiat Chrysler in the coming decade. EV support from Hyundai, however, would steer FCA clear of that iceberg.

At the moment it's unclear who would succeed Marchionne as CEO, so another benefit for FCA is that a Hyundai merger would clear up that future leadership mystery. One caveat, however, is that Hyundai CEO Mong-koo is 80 years old, so retirement is looming.

On top of all that, the United States and South Korea are unified by a free trade agreement, which would expedite the cross-pollination of vehicles between both nations. 

Yet despite the synergies that could develop via a Hyundai-FCA merger, senior group manager of Hyundai Corporate and Marketing Public Relations, Michael Stewart tells Roadshow, "That rumor is totally groundless." We also reached out to FCA about the rumored merger, but it declined to comment.

The two companies, however, according to Motor1, were reportedly in talks last year to collaborate on technologies such hydrogen-powered vehicles and transmissions. 

Update, July 2, 3:52 p.m. PT: Story modified for clarity and to add comments.