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.