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Trump could favor a FCA-GM merger, Marchionne reveals

by Andrea Malan

Fiat Chrysler Automobiles CEO Sergio Marchionne received plaudits from Donald Trump for a $1 billion investment in the United States, replying, “As far as I understand, I believe the president-elect could favor a merger between Fiat Chrysler and General Motors.”

This morning, Trump tweeted, “It's finally happening -- Fiat Chrysler just announced plans to invest $1BILLION in Michigan and Ohio plants, adding 2000 jobs”; Fiat Chrysler (FCA) CEO Marchionne thanked the president-elect, and maintained that the decision to invest was, “part of our duty towards this country.” 

Sunday, the day before annual Detroit auto show, Fiat Chrysler announced a $1 billion investment to produce three new Jeep models in the US: the new Jeep Wagoneer and Grand Wagoneer lines, as well as a new Jeep pickup truck line, will create 2,000 new jobs in their Warren, Michigan and Toledo, Ohio factories.

Marchionne denied that the announcement had anything to do with Trump's recent controversies regarding production moving from the US to Mexico; nevertheless, a statement from FCA yesterday read, “the investment in Warren will allow the factory to produce the Ram Heavy Duty pickup truck line, which is currently produced in Mexico.”

“Careful not to block free trade”

In yesterday's press conference, Marchionne claimed that it is too soon to judge the new US administration's trade policies. He cited that NAFTA regards both Mexico and Canada, where FCA has two plants that primarily make cars for the US market: “Should NAFTA be altered, the implications for us would be rather widespread.”

As for the Jeep Compass, which is produced in Mexico, “the investment was decided in 2014, when the car went into production; therefore, we cannot change our plans.”

The CEO then explained the general strategy for allocating production between the various plants: “We have always established our plants in markets that are capable of buying at least 50% of each product.”

He then confirmed that production of the Jeep Compass in Toluca, Mexico, was destined for both the US and European markets.

From this point of view, Marchionne defended the company's production choices by warning, “If we start blocking free trade, that could impact the development of American plants, like the ones at Jefferson North or Warren.” He concluded by stating, “Trump understands the economic side, I don't want to speak for him. He doesn't need my help to understand the negative consequences of certain moves.”

Marchionne also talked about finance, reconfirming their goals for 2018—starting with a positive €5 billion financial standing at the end of the year, and not ruling out that the group might already have a bonus for 2017: “It will depend on how this year ends.”

“Our objectives for 2018 are very simple: a €9 billion operating budget, €5 billion in net profits, and €5 billion in the bank by the end of the year; by now the analysts are aware that things aren't all pie-in-the-sky.”

Marchionne confirmed that his job will be to fully accomplish their 2014-2018 plan, adding, “I hope that the 2018 balance sheet will be the last one I have to sign.”