DETROIT (Bloomberg) -- A merger of Fiat Chrysler Automobiles NV and Volkswagen AG would create a well-balanced global automaker that would be highly profitable, John Krafcik, president of auto-buying website TrueCar Inc., said today.
“This is an absolutely brilliant combination,” Krafcik, former CEO of Hyundai Motor America, said in an address to the Automotive Press Association here. “For sure, these two companies have a natural attraction to each other.”
Krafcik’s assertion is based on an analysis of revenue and model mix of the companies’ U.S. businesses. Fiat Chrysler does well in SUV sales with its Jeep brand and has a strong Ram pickup business. VW does well in the premium car segment with Audi and has a good model line of mainstream cars, he said.
The two automakers denied they were in merger talks in July after a German magazine reported such discussions were under way.
Fiat Chrysler CEO Sergio Marchionne told Bloomberg this year that a new No. 1 automaker could emerge in the future that would be larger than Toyota Motor Corp., the world’s top car company by vehicle sales.
“There is room to create one guy which will be bigger,” he said in an interview. “The industry needs it, as it’s still very fragmented.”
Krafcik, a former Ford Motor Co. engineering executive, said his analysis was an “academic exercise” and not based on actual insights into the two companies’ thinking. He also said Ford and VW would be a good fit, though such a combination is “highly unlikely.”
Combining Fiat Chrysler with VW is “just such a natural possibility,” Krafcik said.
TrueCar, which is based in Santa Monica, Calif., and helps customers find the best price for vehicles they buy and sell through dealers in its network, had its initial public offering in May. The stock, which had almost doubled since its market debut, closed today at $17.19, down 1.8 percent.
The company is led by entrepreneur Scott Painter and counts Microsoft Corp. co-founder Paul Allen’s Vulcan Capital as an investor.