Analyst Claims GM and Ford Merger Could be on the Horizon
Today, news has broken of the potential FCA merge with Renault. The idea would be to bring together their strong suits and essentially share markets. Why would anyone want to do this? Why not keep all of the profits in-house? As it turns out, the latest technology that the industry is exploring is rather expensive. It’s even too expensive for some of the titans of industry to be able to grip themselves. Any way we slice it, the industry seems to be demanding some sort of self-driving option along with an electric option. These require monumental investments of capital.
The thought seems to be that sharing resources or markets would make sense in the long run. If this merger were to come to fruition, the company formed would be the third largest in the industry. Because the move would bump General Motors out of third place, the rumor mill has started grumbling.
It’s important to note that the following is entirely speculative in nature. Neither General Motors nor Ford has as much as muttered a peep about an alliance. However, with the way that things are shaping up, some analysists seem to think that it’s at least worth talking about.
Douglas A. McIntyre of 24/7 Wall St. seems to think that maybe a merger is coming. His argument centers around the idea that with Ford stumbling along with this new monster to compete with. Because of these factors, maybe creating a monster of their own makes sense. When teams are being formed, it could be quite difficult to compete on your own. This is the mindset that the argument behind the merger seems to take on.
Mcintyre argues that “While GM may have a future as a standalone car company over the next decade, Ford does not. It’s market cap is down 42% over the past five years, while GM’s is close to flat. The savings in a combination would be well into the billions of dollars. A marriage of the two also could compete effectively with Toyota, VW and perhaps the new Fiat Chrysler and Renault combo.”
Long story short, there are some in the camp that Ford simply won’t be able to keep up. When combined with the fact that titans are being formed, perhaps the smartest move is to combine forces. The General might even be open to a boost if this FCA and Renault merger gains a serious head of steam. Only time will tell what actually happens. For now, at least, the early speculation seems to be sniffing out the most unlikely of alliances.
The answer to any merger is going to revolve around their ability to stay afloat. With the market feeling a lot like it did back in the bailout days, maybe a merger is the best option for all. Perhaps a Ford and Chevrolet merger isn’t the strongest match. However, we wouldn’t be shocked to hear some more serious rumors to come. Perhaps one or the other will combine forces with an overseas producer. GM merger with ford looks more likely than ever.
