Fiat, Chrysler CEO: Companies May Merge, Create Four Management Centers

Earlier this year, Fiat increased its stake in Chrysler to 25 percent from the 20 percent it previously held. However, Fiat Chrysler CEO Sergio Marchionne recently revealed that the two companies could eventually become indistinguishable if they were to merge into one entity.

“From a corporate governance standpoint, there’s a point where separate companies make no sense,” Marchionne told Automotive News. “Once we get there, why do I need separate companies? I’m no Carlos Ghosn,” he continued, noting Carlos Ghosn who is the joint CEO of Nissan and Renault.

Before the two companies could merge however, Fiat and Chrysler need to meet a series of objectives as defined by the U.S. government during Chrysler’s 2009 bankruptcy. Commencing production of the Fiat 500’s, 1.4-liter, MultiAir engine in Dundee, Michigan was one such objective, which allowed Fiat to increase its stake in Chrysler to 25 percent. One known requirement is that the remaining $6.9 billion in government loans would need to be paid off before the merger could occur -- something Marchionne aims to have accomplished by the end of this year with an IPO. The merger itself though, could take longer.

“Who knows? In the next two to three years we could be looking at one entity. It [Fiat-Chrysler] could be based [in the U.S.],” Marchionne said.

Marchionne, along with Fiat chairman John Elkann, went on to clarify his last comment after it drew harsh criticism from Italian politicians. They elaborated, revealing that the companies will likely merge, but will be run from four planned management centers, one for each of the main markets. The main corporate headquarters will remain in Turin, Italy, with a secondary location in Detroit, Michigan. A third management center would be in Brazil, and if necessary, a fourth location would be added in Asia.

Source: Reuters, Automotive News (Subscription required)

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