When someone makes a categorical denial, there is usually more to it than is immediately apparent. So when recently Fiat issued a bald one-line statement - 'Fiat states that they have not held discussions with Volkswagen regarding a potential merger' - suspicions arose that something had been going on behind the scenes.
The statement was prompted by an article in a German magazine that suggested that VW and Fiat Chrysler would form a mega-corporation, making more than 15 million cars a year. It seems that the story related to internal discussions at Volkswagen headquarters in Wolfsburg and that the proposition was never put to Fiat, which was busy completing its takeover of Chrysler in the US.
Ferdinand Piech, the chairman of the Volkswagen supervisory board, and chief executive Martin Winterkorn have made no secret of their determination to be make the Volkswagen Group the world's number one motor manufacturer. Piech has said on several occasions that he would like to acquire Alfa Romeo, only to be rebuffed by Fiat chief executive Sergio Marchionne, who is allergic to all things German.
Whilst Volkswagen might have seen an opportunity to pounce on Fiat when its negotiations acquiring Chrysler seemed to be in difficulty, the logic of such a merger is hard to fathom. Chrysler is stronger than VW in the US and VW's sales in China far exceed Fiat Chysler's but elsewhere they are in direct competition. South American markets, notably Brazil, are very important to both and surely they would not benefit from becoming one entity there.
So, nothing is happening right now but we can expect the idea to be revived at a later date. There is no smoke without fire. . .