Marchionne Isn't Finding Any Potential Dates For Marriage

Cameron Aubernon
by Cameron Aubernon
marchionne isnt finding any potential dates for marriage

Though FCA CEO Sergio Marchionne is still looking to merge his company with another automaker, no one is all that willing to tie the knot.

Despite Marchionne’s quest to consolidate the industry by leading by example, he’s managed to strike out in some way with Ford, General Motors, Peugeot, Renault-Nissan and Volkswagen.

Regarding GM, CEO Mary Barra stated Thursday that her company already had plans of its own and that it wasn’t interested in consolidation with another automaker, according to Detroit Free Press:

We laid out a comprehensive plan that takes us through the early part of next decade. We’re already in that top tier. We have a well-articulated plan and we are not going to entertain anything that would distract us from achieving that plan.

Meanwhile, a proposed tie-up with Volkswagen came to naught, though Marchionne stated such a thing was never in the cards in the first place, despite claims by VW Group chairman Ferdinand Piëch of having met with FCA officials to discuss buying a part or all of FCA.

Though there are still other smaller automakers Marchionne could pursue in the spirit of consolidation, like Mazda and Tata, there’s the issue of his own company’s performance as of late. Already stuck with large debts, Forbes states profitability is a major issue among shareholders regarding the automaker. In the U.S. alone, the issue stems from its pursuit of sales volume over profit via aggressive incentivizing. As a result, margins remain at 4 percent and pre-tax earnings have climbed a mere $2.7 billion, even with revenues doubling by $40 billion since the start of the new decade. Thus, no company would likely consider consolidating with FCA.

As for why Marchionne is banging the drum of consolidation, especially as far as his company is concerned, it comes down to survival in the face of competition from outsiders like Google and Apple. The arrival of non-traditional companies like the two tech giants could force automakers to keep up with the pace of change such companies would set the further the latter group digs into the former.

For now, though, the FCA CEO laments the difficulty in finding a partner, going as far as to provide Bloomberg with a metaphor about the search earlier this month:

One of the most difficult things to do is to get the turkey to invite himself to Thanksgiving dinner.

[Photo credit: FCA]

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  • Wmba Wmba on Apr 24, 2015

    There has been speculation for months on this subject. Marchionne knows that the less than 4% margin at FCA isn't enough to fund future plans, because as he says, the cost of capital is so high. Discussion on Allpar forums has been as good as any, though marred by the usual emergence of the knuckledragger brigade who know nothing but have opinions. But Marchionne does strange things that cost FCA a lot of money and drags down the potential for profit. For example, the turbo 1.4l MultiAir in the Dart and Renegade plus regular 1.4 l for the Fiat 500 made in Mexico, has been made in Dundee, MI. Also, there is an engine plant in Poland for the 500s made there, and even mention that the same engine is now being made in Italy for the Renegade/500X. The latter also have 2.4 Tigerwimp engines made in Michigan or maybe Mexico shipped to Italy where vehicle assembly takes place. All seems high cost and little detail is readily available of what exactly is happeneing. Trying to keep a factory going in Serbia to make the execrable 500L plus assembling Renegades in Italy to appease the local unions/politicians, because other models have been dropped makes the FCA strategy seem very high cost and totally hopeless in the long run. If you were another automaker and found Fiat sniffing around looking to find a partner to share capital costs, due diligence would give you pause as to what in hell is going on at FCA. It's highly unlikely that anyone with brains would join with Fiat to meet Marchionne's vision of a 7 million vehicle a year automaker, because who wants to join a sinking ship? It all seems a bit desperate with no obvious resolution at hand. That's why Marchionne is trying to hold Toledo and Ohio ransom over the Jeep factory. Every buck counts. And the pile 'em high, sell 'em cheap philosophy at retail to move the metal seems more obvious than the other automakers. Add in the poorest reliability ratings that FCA easily achieves, and really, it's a case of caveat emptor, both from a buyer and possible joint-partner perspective.

    • GeneralMalaise GeneralMalaise on Apr 24, 2015

      "and the poorest reliability ratings that FCA easily achieves ..." yes, damn that Bluetooth!

  • RHD RHD on Apr 27, 2015

    Mary Barra's plan for GM appears to be "fewer divisions and lower market share". If so, she is succeeding, and a merger with FCA would hasten that plan. It's the old save your sinking ship by tying it to another sinking ship idea.

    • Pch101 Pch101 on Apr 27, 2015

      Both GM and Ford have publicly stated their unwillingness to pursue a merger with FCA. I doubt that they are lying about their lack of interest.

  • Dukeisduke This would be a nice car. I've long been a fan of the W123 series cars - and one of my favorite colors for these. This would be the injected (D-Jetronic?) 2.8l inline six.Was the cloth always purple like this, or is it age that turns it purple?
  • NotMyCircusNotMyMonkeys nobodys mentioned free HD radio?
  • ChristianWimmer I am a huge W123 fan but I never liked the square headlights on the 280/280E/280C/280CE models and later on the post-1983 entry-level models. The W123s always looked right with the circular headlights.This is a great car, though. But 230C/CE & 280C/CE are so common here - I want a US-spec 300CD Diesel or 300CD Turbodiesel because that would be an exotic here in Germany.
  • NotMyCircusNotMyMonkeys not a single word on whether this grey market would even pass smog or be driveable in the state.
  • MaintenanceCosts Gorgeous, even if the W124 coupe is even better. Too bad about that paint color, though.