Friday, October 30, 2020
Fake News FCA and Subaru – complimentary merger

FCA and Subaru – complimentary merger

It’s no secret that FCA’s been on the lookout for a business partner for a while. Mr. Marchionne has hunted for a suitor for the last few years, courting everyone from GM, to VW, Hyundai and a number of Chinese prospects.

In a surprise move, Subaru’s (ex Fuji Heavy Industries) stepped up to the plate and plans to go forward with a merger of equals is underway. This association makes a Mount Fuji worth of sense if you think about it.

First, both companies’ market caps have hovered near the $30-billion mark over the last few years thus there’s no takeover in this equation per say. Secondo, both car companies’ portfolios, it turns out, are extremely complimentary. Let’s briefly break it down.

FCA’s not been able to sell remotely compact or even midsize cars in North America for what seems like forever. Fiat’s re-introduction here has more or less been a bust and if it wasn’t for the Jeep Compass and Patriot, there would be no small FCA anything on the road – they essentially own large and full-size everything however. And they do big very well, in fact producing some of the more interesting and exciting sedans and SUVs in the business.

Subaru, on the other hand, has nothing large. The 3-row Ascent SUV is expected sometime next year but sales are expected to be moderate, at least at first. Besides, there are always arguments to be made in favor of more SUVs. Otherwise, the niche but brilliant Outback is as big as it gets.

This merger then blends Subaru’s appealing compact and midsize AWD products to FCA’s trucks and large cars. Together, they cover the full gambit of product lines, matching pound for pound Toyota, GM and Ford.

There are no plans for any kind of badge engineering nor for a group name at the moment. Much like the Nissan-Renault-Mitsubishi alliance where all players retain their distinct identities, the FCA-Subaru coalition will eventually share R&D costs, platforms and technologies. This could be a very prosperous, and smart union.

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