* FCA boss says VW might be willing to talk after PSA-Opel
* VW says it has other problems to worry about than M&A
* GM says "even less interested" in FCA tie-up than before
(Adds details, analyst, context)
By Andreas Cremer and Agnieszka Flak
GENEVA, March 8 Fiat Chrysler boss
Sergio Marchionne's attempts to find a partner were frustrated
for a second time in as many days on Wednesday, as Volkswagen
(VW) joined General Motors (GM) in dismissing any interest in
talks with their smaller rival.
Marchionne said on Tuesday that European market leader VW
would be hardest hit by PSA Group's
purchase of Opel, which will create a stronger European No. 2,
and the pressure could prompt VW to sit down with FCA.
But VW chief Matthias Mueller was quick to rebuff the
overtures, saying his company had enough on its plate already as
it battles to recover from a diesel emissions scandal.
"We are not ready for talks about anything ... we have other
problems," he told Reuters on the fringes of the Geneva auto
show on Wednesday. "I haven't seen Marchionne for months."
Marchionne has long advocated car industry mergers to share
the costs of making cleaner and more technologically advanced
vehicles and on Tuesday stressed deals were as vital as ever.
"You need to achieve scale or we will end up delivering an
incredibly poor return and margins on this business. We need to
fix this," he said, referring to the wider auto industry.
The PSA-Opel deal leaves FCA in an increasingly difficult
position in Europe. The indebted group has a European market
share of only about 7 percent, its operating margin of 2.5
percent lags most rivals, as does its spending on cleaner and
more autonomous cars.
Mueller's rejection follows a similar snub from GM,
after Marchionne said the U.S. company remained his favourite
merger candidate despite its decision to exit Europe by selling
Opel and having rebuffed FCA's approaches several times already.
"We weren't interested before and we're even less interested
now," GM President Dan Ammann told reporters in Geneva.
A combination of VW and FCA could in theory create a
European market leader with a share of around 30 percent, give
VW a strong foothold in North America through FCA's Chrysler
operations and fix FCA's lack of scale in Asia. But the
combination could also mean thousands of job losses that unions
and politicians from Italy to Germany would strongly oppose.
Mueller also stressed scale was not a priority for VW.
"In my opinion, size does not matter," he said. "I have
always said volume is not our sole goal. We want to be a
successful manufacturer in every way."
Marchionne is courting VW at the worst possible time.
The German company is at the start of a multi-billion-euro
transformation to embrace electric cars and automated driving as
it struggles to overcome its emissions scandal.
While grappling with billions of costs for fines, buy-backs
and other charges in the United States, VW is also facing a
mounting challenges from consumer groups seeking compensation.
The group is battling with its powerful labour unions too
about cost cuts to fund its new strategy.
Since being rejected by GM, Marchionne has focused on
eliminating debt and shifting production towards higher-margin
vehicles, including SUVs, to become a more attractive merger
partner in future. But his options appear to be dwindling.
"In western countries we believe that Volkswagen remains the
main candidate for M&A, but after dieselgate, which likely
stopped everything for a while, the top candidates for an FCA
deal moved to the East (Koreans or Chinese), with all the risks
on timing and political consequences that they would bring,"
said Angelo Meda, head of equities at Banor SIM.
Some analysts also question why anyone would buy FCA now
when the price could be set to fall, given the North American
market - where it makes most of its profits - may be peaking.
(Additional reporting by Ilona Wissenbach in Geneva and Danilo
Masoni in Milan; Editing by Mark Potter)