Elkann Tells FCA Shareholders Company Needs to Merge

In a letter to Fiat Chrysler Automobiles NV shareholders, Chairman John Elkann says the company could save $10 billion per year (€9 billion) by merging with one of the auto industry’s “big guys.”

Elkann reiterates the view of CEO Sergio Marchionne, who has been searching for a merger partner since being rebuffed twice last year by General Motors Co. Both executives agree that industry consolidation will be necessary to cope with the rising costs of product development.

Elkhann figures at even under the most “disruptive” scenario, at least 85% of cars in 2030 still will be driven by people, not machines. He cites an analysis by McKinsey & Co. that projects industrywide revenue from car sales will jump 45% to $4 trillion (€4.5 trillion) by then.

In the meantime, Bloomberg News reports, FCA is focusing on a three-year investment and restructuring strategy to replace FCA’s €5 billion in debt with at least €4 billion in cash. Doing so, Marchionne has said, will help the company negotiate a better deal.