Fiat Chrysler Automobiles CEO Sergio Marchionne sees the potential of creating a new top automaker as companies face low returns on the amount of money needed to develop a new vehicle.
Marchionne said that “there is room to create one guy which will be bigger” than Toyota Motor Corp., the current leader in the automotive industry. He added that the industry needs the consolidation process to generate the amount of capital required to develop and produce new vehicles.
According to a report in Bloomberg, the merger could increase as the automotive industry gets even more competitive. To date, regulators are requiring manufacturers to produce cleaner vehicles and the market demands more features such as voice control, in-car Internet and self-driving system.
Richard Hilgert, a Morningstar Inc. analyst in Chicago, said that the automotive industry should have more mergers and acquisitions due to the high level of competion and capital needs.
John Elkann, Chairman of Fiat Chrysler Automobiles, said that the company “will be ready to participate” in the consolidation proccess “if it makes sense.”
Marchionne and Elkann also said that Fiat Chrysler Automobiles will look at combinations with companies that have operations outside Europe's overcrowded automotive market. However, neither of them identified which company will be part of the said consolidation process.