Chinese auto makers stall on Fiat Chrysler bid

Geely Automobile Holdings Ltd. said on Wednesday it was not planning a bid for Fiat Chrysler Automobiles NV, and while other potential Chinese suitors remain, any tie-up could face significant U.S. regulatory obstacles.

Geely was one of several Chinese car makers cited in an Automotive News report on Monday that representatives of “a well-known Chinese auto maker” had made an offer this month for FCA and that other potential Chinese suitors had interest.

Chinese SUV maker Great Wall Motors and state-owned Guangzhou Automobile Group are among the auto makers that have considered deals with FCA, sources told Reuters on Wednesday. It is not clear whether the auto makers are interested in buying all of FCA or just certain assets.

Others familiar with the situation have said that a Chinese bid could face political and regulatory obstacles in the United States.

FCA chief executive Sergio Marchionne is seeking a partner or buyer for the world’s seventh-largest auto manufacturer in order to manage rising costs and emissions-regulations compliance and develop technology for electric and self-driving cars.

FCA’s shares were up 3 per cent in Milan and New York as investors continued to place bets on an acquisition of the $20-billion (U.S.) company, with Milan-listed shares touching their highest since July, 1998

A number of potential acquisitions of U.S. companies by Chinese buyers have been delayed or killed because of reviews by the Committee on Foreign Investment in the United States, or CFIUS. The interagency panel assesses the national-security implications of foreign investments in U.S. companies.

CFIUS is on track to review a record-setting 250 to 300 transactions in 2017, one expert has told Reuters.

FCA and Geely Automobile’s parent firm, Zhejiang Geely Holding Group, had held initial talks late last year, a source familiar with the matter said without disclosing the nature of the talks.

“We don’t have such plan at the moment,” Geely Automobile executive director Gui Shengyue told reporters on Wednesday, when asked if Geely was interested in Fiat. He said a foreign acquisition would be complicated, but he did not elaborate.

“But for other [Chinese] brands, it could be a fast track for their development,” Mr. Gui added.

The source noted that Geely’s parent company only three months ago announced its first push into Southeast Asia with the purchase of 49.9 per cent of Malaysian car maker Proton.

Chinese auto makers want to expand their overseas reach and FCA would offer a strong brand in Jeep as well as access to a U.S. dealer network.

Mr. Marchionne said in June that Guangzhou was not interested in buying a stake. FCA and Guangzhou build Jeeps in a joint venture in China.

FCA declined to comment on Wednesday.

Mr. Marchionne has resisted separating the profitable U.S. operations of the company, including the Jeep brand and the Ram pickup business, from the less profitable Italy-based Fiat brand business.

Europe’s largest car maker, Volkswagen, and General Motors have both said they are not interested in talks with FCA.

Mr. Marchionne had retreated from his search for a merger in April, saying the car maker was not in a position to seek deals for now and would stick to its business plan. More recently, Mr. Marchionne promised investors a new strategic plan by early 2018.

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