Possible Scenario?
Eugene Investment & Securities said in its report on September 19 that Hyundai Motor Group and Fiat Chrysler Automobiles (FCA) sold a total of 11.5 million cars last year, and the former can become the largest automaker in the world once it takes over the latter. It also said that the Hyundai Motor Group, which is planning to have a full lineup of SUVs in 2020, can do so with greater ease and a lower chance of failure by acquiring FCA.
In fact, rumors are already circulating that FCA is regarding the group as its potential buyer. FCA sold 4.16 million cars worldwide last year. Many experts in the industry are also saying that their merger will result in a highly positive effect for both. The Hyundai Motor Group is currently suffering a decline in sales in China and needs to diversify its markets while FCA has a large presence in the European market. The Hyundai Motor Group is struggling in the U.S. market with a small number of SUVs and it has no pickup truck in its current lineup while FCA is the owner of Jeep and RAM. The Hyundai Motor Group and FCA have their manufacturing facilities in different regions, too. It is also said that the Hyundai Motor Group’s acquisition of FCA will please U.S. President Donald Trump.
Nevertheless, the Hyundai Motor Group is flatly denying the possibility, saying that FCA is a company underprepared for self-driving vehicles, electric vehicles and the like. Hyundai Motor Group’s Vice Chairman Chung Eui-sun recently remarked that he is interested in cooperation with ICT companies and those that have green car technology rather than traditional automakers. The Hyundai Motor Group also mentioned that becoming the largest automaker in the world in terms of quantity is meaningless and it focuses more on quality than on quantity.
Still, Eugene Investment & Securities commented that the Hyundai Motor Group can easily afford the cost required for the acquisition, which is estimated at five trillion won (US$4.5 billion) to 10 trillion won (US$9 billion), and the acquisition will be a boon to the Hyundai Motor Group by leading to joint R&D, facility sharing and cost reduction.