Volkswagen CEO Say Theys Are On Track Financially And Are Open To Talks With Fiat Over Merger

A little misdirection and few white lies to hide the numbers and buy a few years time to get us out of this diselgate mess.

Why would anyone want Fiat?

Only the Chinese have any use for Fiat....and they would have to operate it at a loss to gain engineering knowhow and a European dealer network. The only parts of FCA worth anything to VW or GM or any other major car maker are Jeep, Ram, Maserati, and Alfa Romeo (more the value of the brand and the potential of the new platform).

Sergio is probably peeing in his pants right now

This is all about Jeep and Ram for the $$ they create and VW has wanted Alfa forever.... everything else is disposable.

Problem is that you can't just "dispose" of Fiat or hugely scale down FCAs US operations due to all the legacy pension costs. The only option for any buyer is to continue to operate these companies and hope to eek out a profit...No publicly traded company can just buy FCA and shut down Fiat and add all the ongoing pension liabilities to their balance sheets without a shareholder revolt.
If it were as easy as keeping Jeep, Ram Maserati and Alfa and shutting down the rest then every major automaker would be salivating at the proposition.

What you said is illogical. Continuing money-losing brands as a strategy of having money for legacy pension costs fails in two ways. No profit = no revenue to support those pensions. Continuing brands that do not make money only employs more people that will need more pension money.

VW needs Jeep and Ram because they have NEITHER segment covered.

Jeep becomes their "Land Rover"

Ram gets them pickups.

Merge SEAT and Fiat...oh the irony of that.

Dodge and Chrysler die. Skoda shows up in some of those dealers.

Alfa-Romeo and Maserati get "sold" i.e. given to Ferrari.

Two peas in a pod and by that I mean cheaters. Neither company will ever see any of my money.

Shutting down Fiat today would mean the pension funds would become insolvent overnight and the owner would have to pump in billions to make the fund solvent...recording such a huge loss on a company books is not an option as it would destroy stock prices and drive bond rates sky high. Remember that due to reserve shortfalls almost all Pensions take some of the contributions from todays employees and use those to pay retirees kind of like social security.

Even if they continue to operate Fiat at a loss, the loss is not a huge one on the yearly books so the stock prices don't take a huge hit and the company can still access capital at a reasonable cost.

Bullshit! If VW were to buy FCA, the pension fund would simply move to the new owner to fund. It would not become "insolvent overnight" as per your exaggeration. You act like the pension fund liability is shockingly high and yet VW just found a spare 20 billion doing nothing and paid off dieselgate. The pension fund is a consideration of course, but continuing brands that are not making money only increases the pension liability. You know literally NOTHING about how a business works. If the Democrats ever get back into the White House, you may wish to apply for a job as an economic consultant because "thinking" with idiocy like yours is how they roll.

I know a lot more about how large businesses operate than you do. Yes if VW buys FCA they will become liable for the pensions, I never said the pensions would become insolvent in this circumstance...the insolvency would occur if they proceed to shit down Fiat. If VW proceeds to shut down Fiat they will no longer have the contributions from current fiat employees flowing into the pension fund. That money is required to keep the funds solvent, without that money coming in the fund becomes insolvent and VW will have to put up the shortfall, in many countries when a pension has no more contributions coming in, the owner is required to make a large cash infusion to make it solvent.
This has nothing to do with politics, this is the basics of how pension funds operate, there are very strict laws regulating how much reserves as a percentage of liabilities that the funds have to keep on hand. Like I said earlier, if it were as simple as buying FCA and shutting down Fiat, Dodge, Chrysler every major auto maker would be all over the proposition

Which is has more liability, potential dieselgate outside of US may get very big.