Fiat Chrysler CEO open to a deal as PSA circles

Daniele Lepido, Elisabeth Behrmann and Oliver Sachgau
Bloomberg News
Fiat Chrysler Automobiles CEO Mike Manley speaks to media in the FCA exhibiti space at the North American International Auto Show in Detroit in this Monday, January 14, 2019, file photo.

Fiat Chrysler Automobiles NV Chief Executive Officer Mike Manley gave the clearest response to PSA Group’s nascent overtures for a possible cross-border car alliance: we’re ready to look at anything.

Manley, who took over from late CEO Sergio Marchionne in July and is under pressure to deliver a turnaround for the carmaker’s business in Europe, said Tuesday the U.S.-Italian manufacturer would look at “any deal that would make Fiat stronger.”

Manly was responding to a question at the Geneva Motor Show on whether Fiat Chrysler would engage with PSA. The French carmaker of Peugeot, Citroen and DS cars has started sounding out advisers for a possible deal that would turn the company led by Carlos Tavares into a global player, according to people familiar with the matter. Fiat is among possible targets considered, the people said.

Manly has been battling issues left over from the reign of the late CEO Sergio Marchionne as well as emerging challenges. China, the world’s biggest auto market, has weakened substantially while demand in Europe has declined for five straight months. Fiat generated 20 percent of its revenue in Europe last year – but just 6 percent of operating profit – as the Fiat, Maserati and Alfa Romeo brands struggled.

PSA is ready to seize opportunities for expansion, saying manufacturers need to change or “die” in the rapidly evolving auto industry.

While PSA is focused on strategic initiatives such as bringing the Peugeot brand to North America and expand Opel to Russia, “we are also open for business,” Tavares said in an interview with Bloomberg TV. “There is nothing in our mind that we want to be rigid or not open minded. We want to be open and try to look for the best opportunities for our company.”

Tavares is riding high on turning around General Motors Co.’s Opel and Vauxhall brands in record time – the business recorded a profit last year after two decades of losses. The feat (PSA bought the nameplates in 2017) has helped boost PSA’s share price 22 percent in the past year – compared with a 17 percent drop in the Stoxx Europe 600 Automobiles Index.