By on October 9, 2014

Sergio Marchionne - FCA

Fiat Chrysler Automobiles CEO Sergio Marchionne — who will be retiring from the company after the next five-year plan runs its course after 2018 — believes mergers between automakers will one day result in a new No. 1 automaker.

According to Bloomberg, the driving factor in creating an automaker above Toyota on the global manufacturer podium will come down to money and competition, as automakers will likely need more of the former to develop and produce new vehicles while also fending off all comers, merging with potential partners as needed.

As far as FCA is concerned, chair John Elkann says the company would be ready to consolidate resources with another within the next five to 10 years “if it makes sense” to do so. The company would look outside of Europe for a partner if and when the time comes.

For now, FCA plans to take sixth place by expanding sales on the strength of new models, such as the upcoming Jeep Renegade and the reintroduction of Alfa Romeo to the United States market. The automaker aims to deliver 7 million units in 2018, compared with 4.4 million in 2013.

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46 Comments on “Marchionne: New No. 1 Manufacturer Could Arise From Mergers...”


  • avatar
    Lie2me

    I believe him. Can you imagine a company with say great trucks (Ford) merged with a company that makes great cars (BMW) what a formidable force that could be?

    • 0 avatar
      bobman

      Didn’t Ford own JLR? I can’t say that was the best thing to happen to JLR. What makes you think a Ford / BMW merger would work? I don’t see it, although Ford would benefit in that they would have some credible competition in that space.

      There was talk of a Suzuki / Fiat tie up a couple years ago. Not sure if that would give them the volumes they’re looking for though. Mazda?

      • 0 avatar
        Lie2me

        The merger of equals both bringing good products to the table as opposed to the buyout of one by a dominant

        • 0 avatar
          bobman

          “merger of equals” deja vu all over again? :}

          I know you were just giving that as an example but, that would be the difficulty. Finding two companies that would benefit from the association. Best examples of that would be Fiat and Chrysler or Tata and JLR.

          • 0 avatar
            ect

            Lovely as it sounds, and despite the hype that companies put out, there is really no such thing as a “merger of equals”. There’s ultimately an acquisition of one company by another.

            Mergers of companies that are roughly the same size usually don’t work. The two different cultures within the combined organization wage civil war to seek to assert dominance, which distracts everyone from the mundane task of actually running the business.

            Acquisitions work best when the acquiror is much larger than the target, everyone knows that it’s an acquisition and the culture of the acquiror dominates from the outset. Without the distraction of fighting for dominance, people can devote themselves to moving the business forward and trying to realize the strategic benefits that the acquisition is intended to achieve.

      • 0 avatar
        bball40dtw

        What car was JLR building in 1990 that was “great”? I can’t think of anything that was even good.

        • 0 avatar
          bobman

          I guess what you’re saying is ‘what did JLR have to lose by becoming part of Ford. Probably nothing. The thing is they gained nothing while, their association with Tata has resulted a significant improvement in their offerings. I believe their sales are setting company records.

          • 0 avatar
            bball40dtw

            They gained quite a bit. All of their current prodcuts can trace their roots back to Ford. What new platform has Tata built for JLR? Ford sold at the wrong time.

          • 0 avatar
            bobman

            I don’t know of any new platforms, but JLR is enjoying a level of success they didn’t have under Ford. Even in the good times. Anyway, nothing against Ford. Just think the current arrangement seems to be working well for Tata and JLR at the moment.

            Ford and BMW, not sure how that would go.

          • 0 avatar

            Indeed. The development work for all of their current wares (including the all-aluminum 2013-present Range Rover and 2014 Range Rover Sport) was mostly done under Ford. Even the brand-new Discovery Sport is underpinned by a pre-existing Land Rover variant of the Ford EUCD platform. Tata has done nothing in the way of physical resources, but it has provided J/LR with the funding that it needed to continue.

            The *best* thing that happened under Ford, especially for Land Rover, was that Jaguar and Land Rover were lumped together in the first place. This allowed Land Rover to get rid of its BMW and Rover mechanicals and start using Ford/Jaguar ones instead. Imagine where Land Rover would be now if it was still owned by BMW. BMW probably wouldn’t have created the highly-profitable Range Rover Sport, because it competes with the X5 (and attracts similar clientele). BMW *would*, however, have tried to make a special Range Rover with a coupe-like roofline, a la X6…

          • 0 avatar
            RobertRyan

            One thing cutrent Admin have admitted, that things were much more constrained under Ford. They have a lot more resources and freedom under TATA

          • 0 avatar
            wmba

            You say, ” Tata has done nothing in the way of physical resources, but it has provided J/LR with the funding that it needed to continue.”

            No new physical resources? You may find this link interesting

            ” http://www.theguardian.com/business/2014/jul/28/jaguar-land-rover-blazes-trail-british-car-manufacturing“

        • 0 avatar
          Big Al from Oz

          @bball40dtw
          They actually build real prestige and luxury SUVs and CUVs, not pickup truck station wagons. These vehicles even have real off road creed.

          This is a good start.

  • avatar
    Fred

    2.6 million more cars based on the Renegade and what ever Alfa brings over, seems to be optimistic, even including incremental sales in their current product lines.

    • 0 avatar
      Lorenzo

      We all should have learned long ago that Fiat’s projections of future sales must be taken with a grain, er, kilo of salt. Marchionne has no background in engineering or manufacturing, and tends to get grandiose with his predictions without consulting anyone in the engineering or manufacturing departments.

      He’s a consummate deal maker, which is why he’s talking about mergers instead of new manufacturing plants/technology. There may be something tactical about over-promising during wheeling-dealing negotiations, but for a manufacturing company building highly complex machinery with long lead times and extensive use of multiple suppliers for components, it’s pure posturing.

      • 0 avatar
        snakebit

        Lorenzo,

        Sergio Marchionne himself may not have a background in engineering, but every day he’s in Michigan(remember that he commutes between Mich and Italy seven days a week) he shares the same floor with and meets with daily the Chrysler car guys. You should check the YouTube report from CBS 60 Minutes to find out what he’s really up to. He purposely has his office on the same floor and keeps close access to design and engineering because, as he says, ‘with these guys I can build a car’.

  • avatar
    dirtyblueshirt

    Am I the only one who noticed the wrong Dodge logo being used? Somebody at FCA’s graphic arts department seems to be slacking.

    • 0 avatar
      mike978

      Well spotted.

      I wonder if Mazda would be a likely partner in 5-10 years time. FCA could try and do what Nissan-Renault did and combine a European company with a Japanese one. It would broaden FCA’s reach if they allied more with Mazda and they already work together on the Mazda MX5/Fiat roadster.

    • 0 avatar
      Lie2me

      Lol, yes, until now.

    • 0 avatar
      danio3834

      It’s doubtful that the image with the transposed logos came from within FCA. Likely from the media or elsewhere.

      • 0 avatar
        Lorenzo

        Why would you think that? It’s an FCA presser with the FCA podium and rear projection FCA background. I’d say FCA put those logos up there. OTOH, the similarity to the Ram trucks logo might mean something to the conspiracy-minded.

  • avatar
    Pch101

    Marchionne was talking a lot about consolidations and mergers prior to the Chrysler deal.

    It’s useful to decode what he says. And he’s hinting quite heavily that he plans on doing some shopping once he has cleaned up the company balance sheet.

  • avatar
    STRATOS

    I would not put too much credence into what John Elkann says, from past comments he made in Italy.He may be the owner of FCA (30%)through his Agnelli inheritance but is still an idiot.Sergio could not trust him to run Ferrari.He may sell fca in part or whole as long as he makes a big profit .As soon as Sergio leaves.All these years as Sergio Marchionne apprentice he is still a bimbo.

    • 0 avatar
      Lorenzo

      Considering Sergio has made himself the indispensible man with those 40 reports going directly to him, Elkann’s Agnelli family would do well to sell off it’s controlling ownership before Sergio leaves, since there can only be chaos with no chain of command to take over.

      We’ll have to wait until a decent interval after FCA starts trading to note what the Agnelli family holding company Exor does with its FCA stock. If they sell out or greatly reduce their position in FCA, Elkann will get another figurehead position among Exor’s other holdings, because he’s the designated public face for the family.

    • 0 avatar
      Lorenzo

      You’re right, he’s the designated figurehead for the Agnelli family holdings through Exor. Sergio has everybody reporting to him with his 40 reports, so a top-down organization like that with no chain of command doesn’t have very good prospects when the “indispensable” top guy leaves.

      It’ll be interesting to watch what happens to Exor’s FCA stock a decent interval after FCA starts trading as a Dutch-registered combined company. If the Agnellis’ agents are smart, they’ll be quietly reducing their holding of FCA at a profit and zero out once Sergio is ready to leave. Elkann will remain the figurehead at Exor until he’s ready to join the far-flung family members in their jet-setting ways.

  • avatar
    ry6puwh7vybo8ghot8nowo9ly4ne4deth5ca7ghe6bo7he7gyc

    He looks like he’s on a Jeopardy-like gameshow…

    “I’ll take Ferrari for $800, Alex…”

    :)

  • avatar
    romismak

    Interresting, Fiat wants to be 6th from 7th and 6th Ford now said wants to be top 5 in 2020 and beyond i think, but can ´t see neither of them go up 1 place without acquisitions.

    Anyway agree with Sergio that automotive industry is still not consolidated and thera re opportunities for various automakers to merge or takeover someone else, but from top automakers i don´t see it, there are giants like Toyota, VAG and GM all this year should sell above 10m vehicles or very close to that number in case of GM, than there are Renault-Nissan – including Avtovaz and Hyundai-Kia as 1 group, this is top 5 for next few years at least, no way Ford or FCA can outsell them just by growth and no acquisitions, but who is there to be ,,eaten,, by bigger automaker?

    8th Honda is very independent for years and there are not biggest player but not small either and most importantly Honda is not only automaker but Honda Motor company – motorbikes, motors for machines and gardens and so on – so only possibility is maybe to spin off auto businnes – but very very unlikely given their history and their corporate philosophy

    9th PSA – now with FR state and Dongfeng involed don´t think some bigger automaker will take them over.

    10th Suzuki – They workd with GM, Fiat and VW – later one having 19.9% in Suzuki and we know how it ended up

    than other guys like BMW, Daimler they are doing fine, BMW is in great condition and Daimler is bigger player than their unit sales considering their Truck unit and LCV unit

    Most likely targets could be Mitsubishi and Mazda i think – to small to compete globally, but wolrdwide presence and known brands, so let´ say 5th Hyundai buys Mitsubishi but it still won´t help them to be No.1, so Sergio might be right we will see another wawe of consolidation, but Toyota and VW are so big this days it would have to be 2x player inside top 10 to merge to create new champion i think and such scenario is really not likely in current conditions

  • avatar
    romismak

    Interresting, Fiat wants to be 6th from 7th and 6th Ford now said wants to be top 5 in 2020 and beyond i think, but can ´t see neither of them go up 1 place without acquisitions.

    Anyway agree with Sergio that automotive industry is still not consolidated and thera re opportunities for various automakers to merge or takeover someone else, but from top automakers i don´t see it, there are giants like Toyota, VAG and GM all this year should sell above 10m vehicles or very close to that number in case of GM, than there are Renault-Nissan – including Avtovaz and Hyundai-Kia as 1 group, this is top 5 for next few years at least, no way Ford or FCA can outsell them just by growth and no acquisitions, but who is there to be ,,eaten,, by bigger automaker?

    8th Honda is very independent for years and there are not biggest player but not small either and most importantly Honda is not only automaker but Honda Motor company – motorbikes, motors for machines and gardens and so on – so only possibility is maybe to spin off auto businnes – but very very unlikely given their history and their corporate philosophy

    9th PSA – now with FR state and Dongfeng involed don´t think some bigger automaker will take them over.

    10th Suzuki – They workd with GM, Fiat and VW – later one having 19.9% in Suzuki and we know how it ended up

    than other guys like BMW, Daimler they are doing fine, BMW is in great condition and Daimler is bigger player than their unit sales considering their Truck unit and LCV unit

  • avatar
    romismak

    Fiat wants to be 6th, Ford 5th, but can´t see neither of them to go up

    Anyway most likely target are Mitsubishi and Mazda

    Honda is to independent, PSA now with FR state and Dongfeng probably are not for sale, Suzuki is still struggling with that VW 19.9% in them,

    And others are not relevant, and top players are not going to buy each other

  • avatar
    romismak

    Interresting would be how they will count numbers for chinese giants when they takeover someone, let´s say SAIC buys Mazda/Mitsubishi – hypothetically. but they can´t double count cars – either SAIC or either VW-GM sell them but it would be funny if one day Chinese SAIC or Dongfeng would be biggest automaker in the world and 80% of those would be JV cars unders foreign brands

  • avatar
    319583076

    Sergio Marchionne surely doesn’t believe most of the stuff he’s getting out there. It’s just outrageous crap that is designed to keep FCA in the media and people talking about their product, i.e. astroturfing, or guerrilla marketing, or whatever garbage name you want to use.

    He’s manipulating the media to get stealth advertising. Period.

  • avatar
    rpol35

    “the driving factor in creating an automaker above Toyota…..” Huh?

  • avatar
    Big Al from Oz

    I do think with the current economic climate FCA will continue to look at the US for cash and not the EU.

    Any company Sergio would be interested would either have the ability for technology transfer or a brand acceptable in NA, or even both.

  • avatar
    goodtimejack

    VOLKSWAGEN…..READ THE WALL STREET JOURNAL

  • avatar
    stanczyk

    This ‘uniformisation, unification\'(..via mergers , ..platform-motors sharing..) , one ‘global-product taste’ will leed us soon to .. “One World Automaker” ..:) (under 1-world-gov control..).

    Companies are loosing their identity and herritage – they share platforms , engines .. they try to fill every segment(instead of focusing what they can do best…) .. etc..
    When the next big economic crash will come you will say see a lot of ‘violent takeovers’ (via financial tricks), .. and you can say good buy to the car-brads you know…

    Just look at Toyobaru twins (what’s the point of producing the same car , and not even differentiate design for every brand..)

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