Please ensure Javascript is enabled for purposes of website accessibility

Why Ford Motor Company Won’t Merge With Fiat Chrysler

By Motley Fool Staff - May 2, 2016 at 2:38PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The offer goes against much of what has driven the Ford's recent success.

Last weekend, the CEO of Fiat Chrysler (FCAU), Sergio Marchionne, approached Mark Fields, CEO of Ford Motor (F 1.71%), with a consolidation proposal.

In this clip from the MarketFoolery podcast, Chris Hill, Taylor Muckerman, and Jason Moser explain why Ford promptly declined, and why joining up with a company like Fiat is likely at the bottom of its to-do list.

A full transcript follows the video.

This podcast was recorded on April 25, 2016. 

Chris Hill: Sergio Marchionne is the head of Fiat Chrysler. He's been saying for some time that the auto industry would benefit from some consolidation, and he appears to have picked his next dance partner: Ford Motor. CEO Mark Fields was asked about this over the weekend and very politely said no, thank you. If nothing else, you have to admire the chutzpah of a guy who says, "I have a $10 billion company. You've got a $54 billion company. We should merge." 

Taylor Muckerman: "Let's talk."

Jason Moser: Yeah, I admire his chutzpah. And this could always change. Things change very quickly. I cannot imagine any scenario where Mark Fields actually wants this to happen. The only reason I could see this actually happening, there are two reasons. Either, A, Mark Fields quit his job as the CEO and the person who fills his role wants to do this; or, B, Mark Fields truly believes that what Alan Mulally helped execute in turning this business around really didn't work too well. And I think the numbers would argue that it has worked out pretty well. 

The whole reason why Ford has been able to make it is they had the wherewithal to shed all of those tangential brands that didn't really matter to the core operations. They tightened up their operations, they cut the fat. This, to me, would just be adding more fat. I mean, there's no reason in the world why they would need to bring Fiat in there. It would ultimately, I think, cause problems down the road. I could be wrong, but I don't think so.

Muckerman: I think it could be a distraction in a time where these big automotive companies could use a little less distraction. They have other things to concentrate on. And Mark Fields seems to be concentrating on those important things, talking about $4.5 billion invested in autonomous and electric vehicles. Forty percent of their vehicles could be offered electrically by the end of this decade. He has some bigger fish to fry, I think, than trying to roll in a few other car brands from a company that hasn't done quite as well as his over the last few years.

Moser: And I think it's a great point he makes -- bringing up the electric vehicles, those things of the future. Mark Fields had to wait for this job. There was a point where he thought he was going to get that job, and the powers that be said, "Wait, not quite yet, we don't think you're ready. Work under Mulally here for a while longer, learn a little bit more." And he was good to be patient and take a back seat. He waited his time; now he has this role. This is not a CEO job that was just handed to him. You could argue that he earned it. And I think he's excited about taking this company forward. And a merger with Fiat would really just be taking it backward.

Muckerman: Yeah. You have to imagine Marchionne's not going to take a back seat to most people.

Moser: No. Probably bigger egos involved than ... yeah, that would cause a lot of trouble.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Ford Motor Company Stock Quote
Ford Motor Company
$11.32 (1.71%) $0.19
Fiat Chrysler Automobiles N.V. Stock Quote
Fiat Chrysler Automobiles N.V.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.