Chrysler, Hyundai Discussing Tech Partnership

CEO Sergio Marchionne confirms no merger in the works, but tech sharing certainly is.

byRob Stumpf|
Chrysler News photo

In an interview on Saturday, Fiat Chrysler Automobiles chief executive Sergio Marchionne confirmed that the automaker has been in talks with Korean manufacturer Hyundai regarding a partnership, reports Reuters. Though no merger is being considered at this time, the partnership between the two companies would result in several technologies which FCA believes to be key technological acquisitions, given Hyundai's extensive research and development.

FCA already uses components purchased from Hyundai; however, the two companies are now in talks regarding sharing more than just a purchasing agreement. Chrysler hopes to strike a deal regarding Hyundai's extensive research in hydrogen as a fuel source, as well as transmission development, confirms Marchionne in the interview. This will likely be part of the company's strategy to separate two of its three components businesses, but the business plan will not be fully revealed until the second quarter of 2018.

Both separations would likely happen from offspring companies of the Fiat brand. One of these, Magneti Marelli, currently manufactures many components for the group, including electronics, engines, lighting, suspension, and more. Another, Comau, manufacturers robotics and performs development in artificial intelligence. Talk by the FCA CEO suggests these two companies may be separated by FCA, though no official word has been released on the potential decision.

“Whether it happens as a spin-off or a distribution to shareholders, or whether we will raise some money in the process—all things to be discussed with the board, we haven’t made up our mind,” said Marchionne.

If the release of the business plan follows the proposed timeline, Marchionne apparently seeks to fast-track the separation of the entities, completing the task by the end of 2018. Though the company has been taking a beating financially for some time, it has slowly been on the road to recovery. Reuters notes that this separation could push FCA into a cash-positive scenario, something which the auto group has not experienced as a whole in some time.

At this time, FCA does not believe that these talks will turn into a position where a merger would occur, despite earlier rumors.