Sergio Marchionne Is Insane

Edward Niedermeyer
by Edward Niedermeyer
sergio marchionne is insane

“Insane like a fox,” you’re thinking. And yes, the Fiat CEO is set to receive “good Chrysler” with a taxpayer-funded bow on top. He also has his eyes on Opel, which the German government is desperate to find a good home for. But lightning still hasn’t actually struck once yet, and may we remind you once again that Fiat is in not-great shape financially. And yet Marchionne, mad with power, turns his eyes towards China. And South America. And Russia. In fact, according to the industry analysts Bloomberg talks to, Fiat is like communism in the 50s: everywhere, especially right behind you. You see, Marchionne “craves” 5 million annual global sales even though Fiat sold only 2.15 million cars last year. Reportedly the Chrysler deal will bring the Fiat empire to 4m sales (lets wait for those chickens to hatch, shall we?) and adding any one of GM’s global divisions (Opel, Latin America, Asia/Pacific) would take it over the 5 million mark. For Marchionne the only challenge is figuring out which ones he can pick up for free.

Where did Marchionne pull the 5 million annual sales number from? “I was at Fiat’s Christmas dinner when Marchionne told managers his plan to create a group that produces 5 to 6 million vehicles every year,” says Guiseppe Berta, who studies Fiat as a professor at Bocconi University. Marchionne, it is said, believes that 5 million is the number he needs to reach for “long-term viability.”

The problem (as our Bertel Schmitt has pointed out), is that Fiat may actually face competition for Opel. With no cash to spend, Marchionne’s offensive may run out of steam in true Napoleonic fashion at the hands of a Russian force of nature ( a plutocrat in this case). Opel may be Marchionne’s “perfect partner,” but he may have to settle for a less glamorous imperial marriage.

Even GM China should be a tough acquisition for a firm with Fiat’s purchasing power (or lack thereof), as GM will fight hard to hold onto the one remaining market that wants Buicks. Also, China’s government-owned automakers could easily outbid Fiat (with a little help from the Party) for domestic capacity and brands. Which leaves . . . Holden? Or GM’s Latin American division. Where, as with an Opel deal, Fiat runs the risk of competing with itself.

On the other hand, it’s hard to write off Mad Marchionne. He may have played a few too many games of Risk, but the man clearly believes in an aggressive strategy. And, so far, it’s paying off. Of Chrysler’s $4.6 billion debtor-in-posession financing, $4.1billion is paid by the US Treasury, $400 million comes from existing secured bondholders, and $100 million is coming from “the sale of Mopar inventory parts.” And not a euro from Fiat. So far, so good.

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  • Menno Menno on May 05, 2009

    You made me smile, Geotpf. I'm actually GLAD to have you write that. I proves that some of us are awake; some are paying attention; some are a little more than a tiny bit alarmed. To say the least. But in reality, I already knew that there are millions of us who are very alarmed by the very rapid way in which it would appear that this country is going the way of the soviet union. If it quacks like a duck, has webbed bird-feet, is wet, it waddles like a duck, and it looks like a duck.... chances are, IT'S A DUCK. Please feel free to mock Ron Paul and those who think as he does. However, opening one's mind often means you learn something new, if you try. If you (or anyone else) would like to see what Ron Paul (and tens of thousands of others)know and understands, it's right here in a synopsis. (Suggestion: Open the "printer friendly" tab - it's much easier to read on your screen). Obviously, the flip-side of honest money is - dishonest money. What we've got worldwide, right now. Dishonest (ironically known as fiat money) leads to EPIC FAILURE. Always has, in several thousand years of human history (what was I saying earlier about knowing history to learn from it/not make the same mistakes?), always will. And is now. Iceland. A preview of America, Britain, Europe...

  • Buckshot Buckshot on May 05, 2009

    What is this, a political forum??? DON´T talk about fascism,nazism,communism,socialism etc. NONE OF THIS BULLSHIT IS RELEVANT TO THE USA. There´s no doubt that USA still leans to the right.

  • JamesGarfield Re: Getting away from union plantsAbout a dozen years or so ago, Caterpillar built a huge new engine plant, just down the road here in Seguin TX. Story has it, Caterpillar came to Seguin City council in advance, and told them their plans. Then they asked for no advanced publicity from Seguin, until announcement day. This new plant was gonna be a non-union replacement for a couple of union plants in IL and SC, and Cat didn't want to stir up union problems until the plan was set. They told Seguin, If you about blab this in advance, we'll walk. Well, Seguin kept quiet as instructed, and the plan went through, with all the usual expected tax abatements given.Plant construction began, but the Caterpillar name was conspicuously absent from anywhere on the site. Instead, the plant was described as being a collective of various contractors and suppliers for Caterpillar. Which in fact, it was. Then comes the day, with the big new plant fully operationa!, that Caterpillar comes in and announces, Hey, Yeah it's our plant, and the Caterpillar name boldly goes up on the front. All you contractor folks, welcome aboard, you're now Caterpillar employees. Then, Cat turns and announces they are closing those two union plants immediately, and will be transporting all the heavy manufacturing equipment to Seguin. None of the union workers, just the equipment. And today, the Caterpillar plant sits out there, humming away happily, making engines for the industry and good paying jobs for us. I'd call that a winner.
  • Stuki Moi What Subaru taketh away in costs, dealers will no doubt add right back in adjustments.... Fat chance Subaru will offer a sufficient supply of them.
  • Dartdude Lorenzo, the reason for low manual transmission here is that most dealers won't stock them. I wanted a 2012 Kia Koup with manual tranny it was available, but no dealers ordered any from the factory hence there was none available. Go on any car manufacture's web site and price and build and build your model and you would be lucky if the model existed and was available.
  • The Oracle Good news is that based on the model years many of these have already been junked or experienced terminal engine failure.
  • Lou_BC I'm confused, isn't a Prologue a preview? This would be a preview of a preview.