Fiat Chrysler in talks with Korea’s Hyundai over partnership

Fiat Chrysler Automobiles revealed that it’s in talks with South Korea’s Hyundai Motor Co. about a technical partnership.

The alliance might become “a strong one,” though there is no likelihood of a merger between the companies, Fiat Chrysler Chief Executive Officer Sergio Marchionne said Saturday at the Alfa Romeo Museum in Arese, near Milan.

“There is the potential of a technical partnership with Hyundai, which already supplies some components and transmissions for the U.S.,” Marchionne told reporters after a presentation on Alfa’s planned Formula One return. “Let’s see if we find a deal to develop transmission and hydrogen.”

Marchionne, 65, a vocal proponent of automaker consolidation, is preparing a five-year business plan before he retires as CEO in 2019. Cooperation on hydrogen propulsion would come as rival plug-in electric vehicles emerge as the dominant technology in the emerging post-fossil fuel era.

The CEO confirmed plans to spin off Fiat Chrysler’s Magneti Marelli and Comau component businesses into separate companies by the start of 2019. The mechanism hasn’t been decided, but could include selling a stake to raise cash.

A spinoff of the Alfa Romeo and Maserati brands is too remote to be discussed at the moment, Marchionne said, while highlighting the importance of motor racing in Alfa’s development. A return to F1 could help polish the marque’s image as it seeks to rebuild an upscale reputation.

Marchionne has invested billions of dollars to develop new vehicles after the Alfa line-up shrank and sales collapsed in the last decade. F1’s global appeal will bring wider exposure after previous attempts to expand beyond Europe were delayed.

The CEO confirmed Fiat Chrysler’s financial targets for 2018, including an increase in operating profit to about 9 billion euros (USD10.7 billion) and the elimination of debt, and said he anticipates “managable costs” from a diesel investigation that Fiat is facing in the U.S.

The issue “will cost us something, but we have reduced the risk expectations,” Marchionne said, adding that a separate French probe is groundless.

Marchionne, who met with U.S. Vice President Mike Pence and other officials at the White House this week to discuss NAFTA concerns, said he doesn’t see Donald Trump’s administration leaving the North America Free Trade Agreement.

“They want to find a solution that somehow re-establishes the American interest being more important,” he said. “They think they gave up too much at the table and they want some of it back. The question is how much and when.” Bloomberg