Would Hyundai Consider Buying FCA?
The rumor mill is churning again with talk of acquisition. What could this mean for Jeep Wrangler fans?
Sergio Marchionne has been trying to find someone to purchase FCA for quite some time. General Motors turned him down, along with other OEMs that were asked. What about Hyundai? Would that be a smart move?
Our friends over at The Drive put together a piece on the possibility of Hyundai doing just that. A Chinese suitor would, of course, not go over well with the United States government. But South Korean-based Hyundai would be a different story. That company already has significant investments in the United States, and that would likely grow with the purchase of FCA.
What’s the likelihood of this happening? Probably slim to none. However, it’s not as bad of an idea as it sounds.
Hyundai already said they’re planning on bringing the Santa Cruz compact pickup truck to market. FCA knows how to make a pickup truck, and how to make it profitable. In fact, buying FCA gives the company access to two profitable brands; Ram Trucks and Jeep. Plus, FCA already has a compact pickup truck in global markets.
It would quickly make Hyundai a full-line automaker in the United States. Plus, the terms of the buyout could include dumping non-profitable aspects of FCA. While we’d hate to see Chrysler, Dodge, and Fiat go away, Hyundai already sells profitable vehicles in those segments and could incorporate engineering from those brands without having to bring the negatives.
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From a financial standpoint, buying a company and keeping the already profitable products while shedding the ones that aren’t is a great idea, and Marchionne’s eagerness to get out means Hyundai could probably pick FCA up at a great price.
What would be the downsides of Hyundai ownership?
At this point, all of Ram Trucks are either built in the United States, or production is largely shifting here. HEMI engines are an exception; they’re still built in Mexico, and it wouldn’t be cheap to shift that production. But as for the cars themselves, the profitable ones are built in the United States already, especially the Wrangler, which is produced in Toledo. However, killing off other brands would still have an economic impact in many areas, especially in the communities where those vehicles are built — even if they aren’t in the United States.
While not a downside, Hyundai wouldn’t exactly be purchasing available production capacity for their own products either. Ram is building trucks at a quick pace, and Jeeps are flying off the lots. They’ll have more money in their pockets, but not a big ability to expand their own product line.
Buying Jeep and Ram is a no-brainer, but it’s still unknown what financial burdens bringing on the rest of FCA would entail.
Again, it’s unlikely that this will happen. Hyundai has made successful inroads into the United States on their own, and it just doesn’t feel like the right time for one big automaker to purchase another. But again, if the price is right, that could dramatically change things.