Photo: Volkswagen
Remember the rumors of Volkswagen wanting to revive the Auto Union name? Turns out they weren't as crazy as we thought, as a recent report from Autocar magazine suggests they also involved a takeover of the newly formed company Fiat Chrysler Automobiles.
Volkswagen has long had ambitions plans to buy Fiat and Alfa Romeo, but they never came to fruition. According to the British magazine, insiders within the German conglomerate devised a secret new plan earlier this year, which would have given them access to many new brands, including Fiat, Chrysler, Dodge, Jeep, Ferrari and Alfa Romeo. The newly formed Auto Union would thus become the largest car company in the world, selling 15 million cars a year, almost half more than General Motor and Toyota.
However, sources say the whole plan has been scrapped because profits margins have become tight at Volkswagen Group. In fact, the company is even considering austerity measures, like cutting more slow selling cars such as the Scirocco coupe and Up! city car. That's on top of the Eos convertible, which has just entered it last model year of production, and at least one of the MPV models.
Despite huge profit margins at Porsche and Audi, the core Volkswagen brand isn't making that much money. With a 2% return on its core business, it's clear that some measures need to be taken immediately. By adding Fiat into the mix, Volkswagen's usual modus operandi of relying on common platforms could have worked well, even in the city car segment.
The deal is now off the table, but can you imagine what it would be like if Lamborghini, Ferrari and Porsche were all owned by the same company? Another upside would have been eliminating a lot of competition in Europe and gaining access to many new customers in both South and North America.
On the other hand, Europe is just starting to recover from a major economic downturn and with sales expected to double there by the end of the decade, it just doesn't make sense to rely on more brands.
However, sources say the whole plan has been scrapped because profits margins have become tight at Volkswagen Group. In fact, the company is even considering austerity measures, like cutting more slow selling cars such as the Scirocco coupe and Up! city car. That's on top of the Eos convertible, which has just entered it last model year of production, and at least one of the MPV models.
Despite huge profit margins at Porsche and Audi, the core Volkswagen brand isn't making that much money. With a 2% return on its core business, it's clear that some measures need to be taken immediately. By adding Fiat into the mix, Volkswagen's usual modus operandi of relying on common platforms could have worked well, even in the city car segment.
The deal is now off the table, but can you imagine what it would be like if Lamborghini, Ferrari and Porsche were all owned by the same company? Another upside would have been eliminating a lot of competition in Europe and gaining access to many new customers in both South and North America.
On the other hand, Europe is just starting to recover from a major economic downturn and with sales expected to double there by the end of the decade, it just doesn't make sense to rely on more brands.
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