The Auto Parts Business of Fiat Chrysler is Getting Sold for $7 Billion

The Auto Parts Business of Fiat Chrysler is Getting Sold for $7 Billion

The Auto Parts Business of Fiat Chrysler is Getting Sold for $7 Billion

The new CEO of Fiat Chrysler has struck a deal to sell off the company’s auto parts business for more than $7 billion. On Monday, the automaker announced that Calsonic Kansei of Japan is buying out their Magneti Marelli division for $7.2 billion. The deal will create of the largest suppliers of auto parts in the world. Mike Manley, the CEO of Fiat Chrysler, took over the reins in the month of July after the death of Sergio Marchionne. He said that the company looked at a wide number of options for Magneti Marelli. Ultimately they decided to sell it off to the Japanese Organization. The organization is owned privately by the equity firm KKR.

The deal comes up at a time when the automobile industry is facing problems from the rise of electric cars and the development of self-driving technology. Established players in this sector, like Toyota, General Motors are teaming up with technology companies. They mainly do so to try and adjust to the landscape, which is shifting. The CEO of Calsonic Kansei, Beda Bolzenius said that the industry has gone through some massive change in recent years and he believes, the upcoming phase will be even more dynamic. In a statement, Fiat Chrysler said that the combined business is believed to have annual revenue of €15.2 billion. The expectation is that it will close in the first half of 2019. The sale will enable Manley to focus more upon the bigger challenges, which Fiat Chrysler is faced up with. That includes the need to win a larger chunk of the Chinese Market, which happens to be the biggest in the world. There is also the challenge of catching up with rivals in developing an electric car and self-driving vehicles.

The merger of the two auto parts businesses have histories, which go decades back. Magneti Marelli was founded in Milan 99 years ago. They were bought by Fiat in the year 1967. On the other hand, Calsonic Kansei started off 80 years ago by making car radiators for Nissan. The suppliers of auto parts specialize in certain areas bearing same products, like exhaust systems and electronics.

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