Report: Chinese Carmakers Circling FCA

Several Chinese carmakers are sizing up Fiat Chrysler Automobiles NV as an acquisition target, according to Automotive News.

The newspaper says at least four companies—Dongfeng Motor, Great Wall, Guangzhou Automobile and Zhejiang Geely Holding—are assessing possible bids. A source tells AN that one unidentified Chinese carmaker made an offer earlier this month that was rejected.

But more bids are likely, and soon, says Chinese auto industry expert Michael Dunne. He points to a central government initiative, China Outbound, that is urging the country’s major companies to acquire foreign assets. Last week Bloomberg News said the plan is likely to trigger $1.5 trillion in acquisitions over the next 10 years, up 70% from current spending levels.

CEO Sergio Marchionne has been looking for an FCA merger partner for more than a year. A source tells AN a deal would include the carmaker’s Chrysler, Dodge, Fiat, Jeep and Ram brands. But the source opines that FCA would spin off its Alfa Romeo and Maserati brands, as it did with Ferrari at the beginning of last year.

FCA would give a Chinese buyer immediate entry to the U.S. and European car markets, complete with ready-made dealer networks in both regions through which it could eventually introduce its own brands.

AN observes that Marchionne has been busy simplifying FCA’s product lineup around high-profit models, looking for non-core assets to sell and taking other steps to make the company a more attractive takeover candidate.