Volkswagen Demands Marchionne's Head
Fiat & Chrysler CEO Sergio Marchionne’s pointed remarks have attracted the ire of Europe’s 500 pound gorilla Volkswagen. VW demanded that Marchionne steps down as president of the European auto manufacturers association ACEA. If he won’t resign, Volkswagen could resign its ACEA membership – which would send the club into instant irrelevancy, not to mention insolvency.
“Marchionne is unbearable as president of ACEA,” Volkswagen communications chief Stephan Grühsem told Reuters. “In our view, his comments are unqualified yet again. We’re therefore calling on him to step down.” If Marchionne won’t heed the call from Wolfsburg, Volkswagen’s “exit from the manufacturers association is an option,” Grühsem told Germany’s Spiegel magazine.
In an article in the New York Times, Sergio Marchionne accused Volkswagen of exploiting the European crisis to gain market share by offering aggressive discounts, “It’s a bloodbath of pricing and it’s a bloodbath on margins,” Marchionne told the paper.
Marchionne currently holds the rotating appointment of the presidency of the European manufacturers club. After he took over, his remarks and initiatives often were regarded as overly reflecting the interests of Fiat and possibly other scratched and dented European makers only, and to run against the interests of the powerful German contingent. By openly attacking Volkswagen, Marchionne burned a bridge too far.
Marchionne is not very popular amongst Europe’s auto CEOs. Privately, some call him an upstart clown, or worse.
Lorenzo on Jul 28, 2012
In the most recent photo of Sergio I've seen, he's growing a beard again. Maybe that's what has VW po'ed. OTOH Sergio is speaking for the other members. In times like these, the big players really put it to those lesser members and force them into consolidation or bankruptcy. In America in the early '50s, the market was booming, but the big three competed with each other for market share with annual model changeovers smaller makers didn't have the resources to match. The result was Hudson, Packard, Nash and Studebaker couldn't compete alone. Packard was forced to join Studebaker in a decade long death spiral, while Hudson and Nash lasted longer as AMC. VW may be only using its economies of scale without regard to the others, or it's actually TRYING to reduce the clutter of smaller European makers and their excess capacity. Considering how long it took Saab to die, how long it's taking for Adam Opel to be put down, and the political obstacles to closing excess plants in high wage countries, the VW method, if that's what they're doing, is a better way to rationalize the industry in Europe. It would also make ACEA superfluous, so a VW exit might come soon anyway - why give the victims a soapbox?
GTAm on Jul 30, 2012
The sooner the Fiat, PSA, Renault, GM and Ford Europe shut down their idle factories and zeros the overcapacity issue they'll be able to compete better with VW on margins. Marchionne has been advocating this for a while now and actually Fiat already shut their Sicilian plant. But closing factories makes governments unpopular. That's why he's calling for a common decision from the big wigs in Brussels. This is a simple plan to save the European car industry and strengthen it for the long term. But VW sits in a different position. They see this as an opportunity to prey on the weaker makers and make Europe their own. So there is no union in Europe. It seems likely that VW cannot stay in the ACEA with this stance. I'm wonder what the repercussions would be if VW exits? With the fragility of the entire EU in balance Sergio is firing without fear. I like it. I'm sure there are analysts out there who have already drawn up several scenarios/outcomes from all this. All very interesting but I hope all the European manufacturers manage to survive. It would be a very dark day in the world for many if Germans were the only European manufacturers to survive.
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