By on April 23, 2015

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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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53 Comments on “Marchionne Isn’t Finding Any Potential Dates For Marriage...”


  • avatar

    I think they need one of the smaller Asian brands (like Renault-Nissan), then they’ll be present in Asia, Europe and the US.

    • 0 avatar

      Mazda and Mitsubishi would be the easiest targets, I suspect. And considering the history between Chrysler and Mitsu, not to mention the state of Mitsu, it could be a tempting proposition.

      • 0 avatar

        Don’t know about Mitsubishi. Sometimes it seems Mitsu auto is a pet project for the parent company. Don’t how that works, but it seems they are content letting Mitsubishi cars relatively uncompetitive. Of course, my perch on the world means I see them differently. I suspect they make a lot of money here for instance.

        Mazda would be good, Suzuki even better. But Suzuki is much bigger than the car division of course.

      • 0 avatar
        Pch101

        Marchionne is on record as saying that he wants scale. He won’t get that from either Mazda or Mitsubishi.

        What he hasn’t said but probably wants most is a defensive position against VAG in Europe.

        He would really like to do a deal with GM, but the interest is not mutual. Ford and Renault are not realistic options. So that leaves PSA and (if he gets lucky) a spinoff of or JV with Opel-Vauxhall as the only remaining choices.

        • 0 avatar
          CoreyDL

          Why would GM’s Opel-Vauxhall unit be interested in doing anything that regular GM wasn’t into?

          It would probably ruin the supply of product for Buick as well.

          • 0 avatar
            Pch101

            It probably won’t. We’re talking about Marchionne’s wish list. He may not get his wish.

          • 0 avatar
            CoreyDL

            Well if he’s wishing scale he better think bigger than the limited market Opel-Vauxhalls.

            If not for Buick and China consuming Buick product, I think Opel-Vauxhall would be confined to Chevrolets badged as Opel. Vauxhall would be dead as a UK-only deal, and there wouldn’t be enough volume to bother with special Opels.

          • 0 avatar
            Pch101

            As of 1Q2015, market share in Europe:

            -VAG: 24%
            -PSA: 11%
            -Opel: 7%
            -FCA: 6%

            Here is the math problem:

            -24 is much larger than 6

            -24 is larger than both 13 (6+7) and 17 (6+11), but the difference is more manageable

          • 0 avatar
            typ901

            Notice the date on this article.

            The GM/Fiat thing has been done and failed.

            http://money.cnn.com/2000/03/13/worldbiz/gm_fiat/

      • 0 avatar
        28-Cars-Later

        I think Mitsubishi corporate would love to offload its MMNA operations and the UAW represented former Diamond Star plant in Normal, Ill as I believe they are already slowly winding everything down on this continent. However a sale or merger with MMNA does not benefit FCA in any way, the whole thing is just a liability. Even if FCA would benefit from Mitsubishi’s global auto operations, MMNA would come along with it. Mazda is a better partner/target. I’d also throw Hyundai out there for a strategic alliance or merger. FCA needs to get into Chinese/Greater Asian markets and the few Western players in China (VAG, GM, Ford) are not suitable for merger/alliances with FCA. Hyundai has been in Chinese joint venture since 2002 and “2014 saw the company sell 1,120,000 vehicles”.

        http://www.ibtimes.com/gm-ford-vw-dominate-chinas-auto-industry-why-cant-chinese-companies-saic-dongfeng-geely-gac-make

        http://en.wikipedia.org/wiki/Beijing_Hyundai

      • 0 avatar
        Atenza

        Mazda’s been the rumor, based in large part on the MX-5/124, debunked rumors (or canceled plans) of a Mazda1 to be similarly co-developed with FIAT, and I’m guessing some intersection of Jalopnik fanboy interests. Mazda lacks of scale, though, and Marchionne wanting more access to developing Asian auto markets, where I don’t think Mazda’s really that strong.

        I’m surprised no one (apart from Marcelo) mentions Suzuki—it’s left the US but very strong in India and small car segments popular in developing markets (I’d imagine potential synergies with the 500/Panda lines) and slightly higher-volume than PSA.

        • 0 avatar

          Mazda has a presence in Thailand. So does Mitsu.

          Suzuki is interesting because it would also get FCA into the motorcycle business against Ducati (VAG) and … who was it that Mercedes bought? I’m totally drawing a blank.

        • 0 avatar
          28-Cars-Later

          SE Asia and India are certainly important, but China is the elephant in the room. Unless the strategy is China is too crowded for us to enter, lets focus on a less served market…

          • 0 avatar
            sportyaccordy

            China boat has sailed
            Too late to set up shop there
            Growth slowing already

          • 0 avatar
            ccode81

            MMC is big in china as engine supplier to whom can’t build it’s own, good presence in some sort of form.

            http://www.mitsubishi-motors.com/publish/pressrelease_en/corporate/2014/news/detail0936.html

            Shenyang Aerospace Mitsubishi Motors Engine Manufacturing Co., Ltd. Profile
            Production volume: 512,185 units (FY2013)

        • 0 avatar
          Pch101

          Marchionne’s interests appear to be more defensive than offensive. VAG has one-quarter of European market share, and that threatens FCA.

          • 0 avatar
            28-Cars-Later

            So he would be better served by a merger/alliance with a firm with European marketshare?

          • 0 avatar
            Pch101

            As far as I can tell, he is most motivated by the threats in Europe, not by opportunities elsewhere. He is playing defense.

          • 0 avatar

            28, for now yes. But that doesn’t solve long term for FCA. Plus in Europe they can do a lot without worrying about mergers, lots of dirty ground work that is not as glamorous as the strategic “grand thinking”. I have heard from lots of people in Northern Europe that the reason they don’t buy Fiats anymore are the dealers for instance.

          • 0 avatar
            28-Cars-Later

            Interesting, thx guys.

  • avatar
    APaGttH

    No suitors really make sense at this point.

    GM, Ford and Toyota sure don’t.

    VAG would be over his dead body.

    Daimler AG and BMW make no sense.

    Honda couldn’t possibly be interested.

    Nissan is a weak maybe but meh.

    Fuji Heavy Industries no way, nor Mitsubishi.

    Hyundai/Kia makes a bit more sense – but doubt they can digest the meal.

    Tata probably couldn’t digest the meal either.

    That leaves the Chinese.

    • 0 avatar
      PrincipalDan

      This is reminding me of the Packard/Studebaker merger. As Marchionne said: One of the most difficult things to do is to get the turkey to invite himself to Thanksgiving dinner.

      Chrysler/Dodge/Ram is basically keeping the rest of the company afloat, if a company with a healthy pile of cash or healthy cash flow were to show up for this wedding they’ll likely be murdered by Fiat for a fat life insurance payment.

      • 0 avatar
        CoreyDL

        I thought everybody was all hopped up on how huge and profitable Fiat was, when they bought Chrysler. What happened to all that?

        Maybe they’re dragged down by all that real life Alfa product development.

        • 0 avatar
          bball40dtw

          What Alfa product development? The 4C that, according to Jalopnik, has panel gaps so large that you can have sex with it? The Miata clone that I would never buy over a Miata? Ooooo I know, the midszied sedan that no one wants and doesn’t exist!

          • 0 avatar
            CoreyDL

            Shh, it’s real. There will be 5 new Alfa models over the next 5.5 years. I mean uh, 9 – yes 9 years.

            Luxury saloon, high-end Range Rover challenger SUV, sports drop top, and two hatches the size of the Mazda 3 but costing twice as much.

          • 0 avatar
            bball40dtw

            Is Segio going to come out again and talk about how Alfa is going to sell 300k cars a year in the US by 2017 even though their only model is limited to like 1200/units? Ridiculous.

          • 0 avatar

            The 4C (and 8C) was little more than a marketing and engineering exercise meant to keep interest in the brand and develop new materials know-how. But even as such, it’s a classic.

            Alfa will have new product. If it’ll be successful or not remains to be seen.

          • 0 avatar
            sportyaccordy

            Lol o yea, the rolling 5 year plan.

            The fact that Fiat hasn’t federalized and imported the Panda is enough in my eyes to guarantee their failure. Those would absolutely kill in urban areas, especially with the 1.4T

          • 0 avatar
            bball40dtw

            I don’t see how Alfa is going to be successful. Even in Europe, where you would think people would buy Alfas, their market share is garbage. Mitsubishi is more relavent in the US than Alfa is in Europe.

            Even if they had product, how are they going to sell it in the US? At Fiat dealerships? I’m sure they want even more showroom poison in those ghost towns.

            You are an Alfista. What is the plan? What product is coming?

          • 0 avatar

            bball, I don’t know what they are doing, but I do have it on good word that here in the factory there were a few Alfas recently doing suspension tuning. I even saw one rolling in the city with MiTo sheetmetal though it was not a MiTo underneath. So work is being done.

            sportyaccordy, you don’t know how they work. As one suit I talked to a couple of years ago more or less put it, “I only believe in new product when I see it rolling down the assembly line, and even then it can still change before hitting the dealer”. ;)

        • 0 avatar

          Fiat is huge and the conglomerate is very profitable. Fiat Auto (that doesn’t exist anymore I believe) had good years and bad years. What is happening now is that the group made an effort and dropped everything it had in Chrysler Corp (cars, factories, processes) the fruits of which are being seen today. The rest was put on the back-burner and is slowly coming to market (500L and X). The years of 2015 and 16 are key for Fiat and 16 seems to be the new horizon for Alfa. Plus all the huge profits generated by markets like Brazil.

      • 0 avatar
        Lorenzo

        You just spilled the beans, PrincipalDan. Sergio isn’t looking for a partner, he’s looking for a turkey to carve up. Never forget Marchionne is a finance guy, a master deal maker.

        He kept Fiat alive by taking GM for billions in that former “partnership”, and hit the jackpot when our government virtually gave away Chrysler. He has a history with Fiat running a car company, and it’s one of selling models without major updates until sales shrivel, and dropping them with no replacement ready.

        Sergio needs another deal to keep the ruse going. The press has already realized his rolling five year plan has nothing behind it but wishful thinking, so he has to dazzle them (and extend FCA’s survival) with his real strength, the art of the deal.

        For those who think Fiat is a huge conglomerate, think again. The ruling Agnelli family has smartly broken it up into smaller pieces, getting huge cash infusions for a large, far flung family, and keeping a controlling interest in each piece through holding company Exor. The Fiat auto group was just a small, separate operation when it “merged” with Chrysler for tax and accounting purposes, and exit Italy.

        • 0 avatar

          Your account of Marchionne is as good as anyone’s, though IMO a bit exaggerated. As I’ve commented elsewhere, all efforts and resources were being put into Chrysler brands and the Jeep internationalization effort. Development of new cars did take a hit, though it never stopped. And in the end it could even work out pretty well for Fiat (and Sergio) as new product, in the beginning of the cycle will roll out as Europe re-bounds. Had some come out a few years ago as originally intended, they would have faced a shrinking market. Everybody did it, up to a point and with variance, you only have to look at the Euro Ford Mondeo launched in the US and elsewhere (like Brazil) much sooner than in Europe.

  • avatar
    derekson

    I think PSA makes the most sense. They have strong brands in Europe as well as a good foothold in the Chinese market. Peugeot and Citroen also play in the mainstream market in Europe that Fiat has largely been pushed out of.

    Suzuki is already partially owned by VAG. I actually just learned this the other day.

    From the PSA side, joining up with FCA could allow them to return to the U.S. Market by exploiting Chrysler and Fiat dealer partnerships.

    • 0 avatar
      CoreyDL

      I feel like from what I’ve read, the Peugeot family is pretty difficult to deal with. And in dire straights.

      But boy am I excited for a 300 series with a Peugeot engine and Citroen suspensions.

      • 0 avatar

        The Denfong (IIRC) capital injection has helped a lot and Peugeot and Citroën are offering new wares that have made the company some money and are growing again in Europe. Their weakness is that they remain largely Europe-bound. As Europe slowly recovers so should they and the family will not be in any rush to sell.

    • 0 avatar
      romismak

      Agree with PSA- by far best candidate – based on all factors – i mean SErgio wants company suitable for EUR-US style of management – PSA – YES
      volume – YES
      some synergies – YES
      not big competition in key markets – YES

      PSA is best candidate by far and i think in 2-3 years PSA can be really doing fine and it can be merger of equals – i mean if China will be as succesfull for PSA like was until now, + Iran operations will be back + Europe will come back to pre-crisis levels it can be merger between FCA at say 5.5m volume and PSA at 3.6 – 4m volume and generating proffits

    • 0 avatar
      HerrKaLeun

      not sure Peugeot makes sense. first, chinese dongfeng invested $1.1. billion recently (basically saved them from bankruptcy). Second, they are equally as weak in Europe as fiat and just started some Chinese adventure with dongfeng. Peugeot may be the one company in an even weaker position than fiat.

      Mitsu also isn’t desirable. what, low credit score costumers, UAW factory and outdated cars should be desirable? Mitsu is today where Chrysler used to be 5 years ago (and still is somehow)

      Mazda may make some sense. they are healthy, but small. they have little more premium cars than fiat/Chrysler. but still technology that all FCA vehicles could benefit from.

      • 0 avatar

        Actually PSA does make sense right now, considering a few big IFs. First IF is if Fiat does indeed recede into niche status. Second IF, would the French actually consider PSA a French company after a supposed Fiat takeover. Fiat still has something to do in Europe IF it does some ground work. Not as sexy as merging, but it can claw its way back to around 10 percent IF Southern Europe comes back, IF the 500X and Punto are successful etc. But from a pure adding market share perspective, a FCA-PSA merger makes sense in the short run.

        As to the Asian tie ups, Mitsubishi is not on sale and probably won’t be. It has a greater presence in developing markets than Mazda. Mazda has a Japanese presence, NA presence and Euro presence, all small, and “driver-oriented”. Much like Fiat. A sort of tie up could be beneficial if well done, merger? Can’t see it.

        Of the Asian independentes Suzuki is the real prize. However, their motorcycle arm gives them a lot of financial room. However again, they are more presente in developing markets like India that gives them much more appeal than Mazda.

  • avatar
    Pan

    Look to the future: Find a Chinese company with which to merge.

  • avatar
    Tstag

    Tata might work. Land Rover and Jeep would sew up the SUV market between them with Jeep doing the lower end and Land Rover focusing on the premium end. Alfa could sit just below Jaguar with a little over lap and a lot of Platform sharing. Mazerati could dove tail with Jaguar at the top end. With Ferrari making the super cars. The Fiat 500 would slot in under Alfa and give JLR a stick to go best Mini with.

    It might work but why would TATA take a gamble when JLR is going from strength to strength anyway? In truth TATA is probably better sitting tight.

  • avatar
    romismak

    GM and Ford wouldn´t make sense – i mean they are direct competition in FCA core market + all those antitrust whatever regulations, i doubt GM or Ford are interested in marriage with FCA – i think all those talks are really just PR stuff but in reality 0.01% chance

    How many said- Asian brands are interesting – Japanese – well

    Honda is as big as FCA – both are about 4.5m cars per year, but Honda is big independent company in other sectors – motorbikes, engines – hard to imagine fusion with them

    Suzuki is also in other segments, but i think Suzuki would be good fit with their volume + India – ASEAN market share, but how Marchionne mentioned they want partner who is suitable for European – American managament – Suzuki already proved with VW they are not suitable for top management unity and cooperation

    Mitsubishi – well how mentioned there are those Mitsubishi keiretsu companies involved – probably they are not for sale

    So that leaves Mazda as best option – but Mazda is to small for FCA to be important partner – i mean FCA can buy them not merge with them or something like that.

    There are Mahindra, Tata and CHinese enterprises but doubt Marchionne has serious interest to work with them

    VW and HYundai/Kia, Renault-Nissan are alliances – groups by themselves so doubt there is possibility to join forces

    I would say PSA is best candidate – with their China operations and recovering Europe they can be back in 2-3 years, their volume is relatively big – if their Iran operations will come back to 300-500k units volume per year even better – also they worked together for years in LCV sector and how things look right now with Fiat EUR operations becoming more ,,niche,, than mainstream there is hardly any competition between them – which wasn´t the case 10-15 years ago

    There is still LCV segment where they are direct competition, but outside of that i see synergies, suitable similar companies – FCA strong in NA- PSA absent, PSA – relatively strong in China, FCA – absent – present with mostly Jeep-not competition for PSA and FIAT is still small player in China, both can achieve some synergies in South America + Europe, but how i mentioned FCA Europe in future will be mostly 500s + premium cars, while PSA is mainstream automaker.

    PSA would be my No.1 choice, after that Mazda

    • 0 avatar
      64andahalf

      I wonder if the costs associated with aging and retiring work forces combined with rapidly improving robotics and AI means that only a fool would buy a company like FCA whole-hog.

  • avatar
    brianyates

    Corey, I also would love to see PSA this side of the pond, however, I don’t think that Peugeots with Citroen hydro pneumatic suspension will fly, Citroen aren’t even sure if their new cars will have the iconic suspension. A shame in my view.

  • avatar
    formula m

    It’s so obvious Sergio is going to stab whom ever he makes a deal with in the back. He is running out of jeep/ram money and needs a fresh source of cash to pay off debt. He already tried to shake down the Ontario government for cash with threats of pulling out of Canada when they just gave billions to them in the bail-out. He should have killed off Alfa and Fiat or at least made them like a Scion style divison.

  • avatar
    TonyJZX

    one could say its imperative on them finding a ‘marriage of equals’

    in that theme, how about Daimler?

    I jest… thing is there’s no company out there that has a similar sized and breadth of product that is both excellent and failing

    if its a smaller company like say Suzuki, then it’d be a flat out takeover

    I use Suzuki an example. I know they are entwined in an abusive relationship with VW.

    And again as an example, who else isnt already in a marriage of convenience with someone else who is also independent?

    hardly anyone

  • avatar
    wmba

    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.

  • avatar
    RHD

    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.

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