Thu, Jun 11, 2015 - Page 15 News List

GM leader Barra brushes off talk of merger with Fiat

AFP, DETROIT, Michigan

General Motors Co (GM) chief executive Mary Barra on Tuesday brushed off talk of a merger with Fiat Chrysler Automobiles NV (FCA), suggesting the top US automaker does not need to boost its size via acquisition.

“We have scale. We’re in the top tier,” she said to questions about overtures from FCA head Sergio Marchionne. “The best way to boost the value of GM’s shares is follow the company’s own its internal plan for improvement.”

Barra confirmed that the company had received an e-mail from Marchionne proposing talks about a possible tie-up.

“That was very much vetted with our management and our board,” she said.

However, GM, which expects to sell more than 10 million cars and trucks worldwide this year, says it can do well enough on its own strategy for growth.

“We’ve got a plan. We’ve demonstrated strong margin growth. We’re investing in technology. We’re generating industry-leading returns on invested capital. We’ve got scale and we’re leveraging that scale,” Barra said. “We want to do what’s right for our shareholders. That’s our focus.”

Last month, Marchionne, who engineered the combination of Fiat and Chrysler, said he expects more consolidation in the auto industry, but did not confirm at the time that he proposed talks with GM.

The Wall Street Journal on Tuesday reported that Marchionne is now trying to enlist hedge funds to help put more pressure on GM to consider combining with FCA, which produced 4.6 million vehicles last year.

Barra did not say directly that talks with any rival were out of the question. She said GM was open to “partnerships” with other automakers, such as cooperation with Ford Motor Co to develop new transmissions, and with Honda Motor Co on fuel cells.

However, she repeated that GM has “had a merger with ourselves in the past couple of years,” pointing to the major reorganization of the company’s engineering staff after GM was forced to recall more than 42 million vehicles at a cost of US$3 billion.

“When you look at what we went through last year, we are a much better company for it,” Barra added, referring to the scandal around faulty ignition switches, which are blamed for the death of at least 107 motorists.

GM is under federal investigation over why it only acted last year to recall cars over the ignitions, even though it knew about the problem for more than a decade.

The paper on Tuesday also reported that GM could face criminal wire-fraud charges in the case.

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