Removing Opel from General Motors’ brand offerings could, ironically, make it more attractive for GM to purchase all or parts of Fiat Chrysler, which is still actively seeking a merger partner.
That is, if GM were interested.
Purchasing FCA would allow GM to maintain a presence in Europe and give it an active dealer network there, as well as give it access to more profit-rich brands such as Maserati, which boasted a 9.7 percent adjusted EBIT margin globally in 2016. A deeper-pocketed GM also could choose to continue to resurrect Alfa Romeo, or sell it off.
It would give GM access to Jeep, which has become a global presence under FCA for the first time in the brand’s 76-year history. Once largely confined to North America, Jeeps are now built and sold in South America (Brazil), Asia (China and India) and Europe (Italy), and could be exploited further under GM.
In North America, while such a combination might bring cost-saving synergies for the two current automakers, the results in terms of manufacturing and retailing jobs would likely be devastating.
A combination of GM and FCA would likely result in large manufacturing job losses, the elimination of at least the Chrysler and Dodge brands, and hundreds -- if not thousands -- of dealer consolidations or closings across the continent.
FCA CEO Sergio Marchionne tried, in vain, to woo GM into a combination or outright purchase of the smaller, debt-laden automaker in 2015. But that effort was rejected by GM executives, one of whom at the time told Automotive News: “Why should [GM] bail out FCA?”
Since being spurned by GM, FCA has steadily worked to right its balance sheet and transform itself into a more appealing potential mate. The company had cut its net debt by the end of 2016 to 4.59 billion euro ($4.87 billion). FCA also eliminated the unprofitable production of compact and midsize sedans in the U.S. to boost production of more profitable Jeep crossovers and SUVs and Ram pickups.
As a result of those and other moves, FCA’s global adjusted EBIT margin rose to 5.5 percent in 2016 from 4.3 percent in 2015, with the bulk of the added profitability coming from its operations in North America.
But while GM was identified as the most lucrative potential partner for FCA by Marchionne in 2015, outside issues remain that made such a tie-up difficult.
For example, the UAW’s retiree health care trust continues to hold a major stake in GM, and might be unmotivated to approve a merger that could trigger thousands of UAW job losses.