Fiat, the century-old Italian automaker, appears poised to move its
headquarters to the U.S. after its planned merger with Chrysler Group.
The move would be unprecedented in the automotive industry, experts said, because of Fiat's deep roots.
"To say that Fiat is pretty entrenched in Italy would be an understatement," said Mike Wall, director of automotive analysis for IHS Automotive. "There is a culture that has been baked in there."
Yet such a move would result from increasing globalization and the need for companies to locate in the biggest auto markets and centers of research and development. Sergio Marchionne, chief executive of both automakers, has been laying the groundwork for such a move in his frequent public comments both in the U.S. and Turin, home of the 114-year-old Italian company.
"You realize that Europe is becoming a less and less relevant fact in the scheme of things," Marchionne said recently in discussing Fiat's quarterly financial results. "That is not to take away from our historical roots. I think it's a recognition of economic conditions."
Fiat owns 58.5% of Chrysler, acquired through a series of agreements that started with the Detroit automaker's bankruptcy restructuring and federal government bailout in 2009.
Marchionne has said Fiat expects to acquire the remaining shares of Chrysler, currently owned by a United Autoworkers Union trust. The two sides are in litigation in Delaware over the price Fiat must pay for Chrysler's remaining shares.
Presumably the automaker would move to the Detroit suburb of Auburn Hills, where Chrysler is headquartered, but Wall said the merged company could also locate in New York or another city.
Such a move would likely draw the ire of Italian unions and politicians.
"There would be a healthy resistance to this from Fiat workers, Italian shareholders and the Italian government," Wall said, but he added that there were some sound reasons behind a potential headquarters move.
"You look at where Fiat's profits are being generated, and it's here, in North America," Wall said.
Europe remains mired in recession, and most automakers are losing money there. European new-car sales fell 10% during the first quarter of this year to 2.9 million, compared with 3.3 million a year earlier, according to the European automakers association ACEA.
Last year, Chrysler Group and Fiat sold 470,000 vehicles in Italy and 1.1 million vehicles in all of Europe, according to IHS Automotive Consulting. By comparison, the companies sold 1.7 million vehicles in the U.S.
During the recent earnings call, Marchionne hinted that the headquarters would be located in the U.S. once the merger is completed.
"The thing that would certainly be the single largest factor in our consideration is the adequacy of the capital markets to support operations going forward," Marchionne said. "And I will leave it to you to decide where that market is."
Fiat had the ability to "shift its interest and to shift its resources to markets that are much more rewarding in terms of investment and return," Marchionne said.
There are other benefits that would help the combined company's business operations, said David Cole, a former University of Michigan automotive engineering professor who is now chairman of AutoHarvest, a nonprofit
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