By on May 29, 2015

Fiat 500 Backside Badging

FCA Chairman John Elkann confirmed CEO Sergio Marchionne did email General Motors CEO Mary Barra about consolidation, though GM wasn’t the only one.

Elkann informed reporters the email wasn’t the only one sent by Marchionne, though the chairman didn’t specify who else Marchionne contacted about marriage, Reuters reports. He adds FCA could consider a hostile bid for GM or another automaker “if there are the prerequisites to do something that makes sense,” again opting to remain vague on details.

As far as marriage in general is concerned, Elkann supports Marchionne’s campaign for overall industry consolidation, hoping the action would spark debate. He also believes consolidation will happen, but declined to say who he thought would make the ideal partner to take FCA’s hand, adding his company had “very good prospects” for the future.

[Source: Fiat]

Get the latest TTAC e-Newsletter!

52 Comments on “Elkann: Marchionne Emailed Barra, Others About Consolidation...”


  • avatar
    ckb

    Wasn’t Marchionne the one who said something like “The global market can only support 2 independent automakers”? Perhaps this is his attempt at a self fulfilling prophecy.

    • 0 avatar
      28-Cars-Later

      Awesome, a duopoly. (/sarc)

    • 0 avatar
      Steve Biro

      He said the global marketplace can support perhaps five or six independent automakers. And he’s probably right.

      • 0 avatar
        Lorenzo

        The emphasis is on “global”. The Chinese, Japanese, and American markets are big enough to allow a non-global automaker limiting itself to those markets to survive and thrive. Before the Daimler rip and strip in 1998, Chrysler was making just under 3 million cars, 2.4 million of them for the American market, and had a profit of $6 billion, almost all of it from US sales.

  • avatar
    sportyaccordy

    Industry is going to send FCA a “do not email” list

    I don’t get why he wants a merger. Why not just co-develop components and platforms as separate entities? Hes already in bed with Hyundai & Mitsubishi for the GEMA engines. He should just seek to bolster that alliance. That’s probably as good as it’s going to get in the mean time. The way this guy is running around, it almost looks like FCA is looking for a low key bailout.

    • 0 avatar
      derekson

      Because FCA doesn’t offer enough engineering strength or R&D tools to bring something to the table for a more significant partnership than the ones they already have? As many have said in many of these threads: Fiat lacks new engine families, new extensible platforms, hybrid/EV technology, etc. They don’t really have a path forward for the next decade plus with the CAFE requirements and such. They are doing relatively well selling trucks and SUVs with the current environment of cheap gas, and Marchionne wants to capitalize on the those numbers to get in bed with a company with better R&D/engineering chops.

      • 0 avatar
        dal20402

        derekson has the only comment of truth in this thread. Unfortunately Marchionne has overplayed his hand and now just looks like the desperate kid who NEEDS one slow dance before the school dance ends. That’s a sympathetic place to be if you’re an eighth grader but not if you’re the CEO of a billion-dollar company.

      • 0 avatar
        formula m

        @derekson you got it!

      • 0 avatar

        This is what Peter DeLorenzo has been saying over at Autoextremist.

        Profoundly sad. I’d have thought DaimlerChrysler was a match made in heaven but it set the course straight to hell – even as it was cranking out those 300s and Chargers.

        Daimler-Benz overplayed their hand and now Fiat has overplayed theirs. Welcome to Studebaker, 2015 edition.

        Don’t worry Jeep fans. SOMEONE will grab them when the whole enterprise goes down.

      • 0 avatar
        anomaly149

        This is a really fun meme for anyone outside of the automotive industry, but not true.

        But, to bite on the bait, an interesting question is finding out how many CAFE credits FCA is buying, and what fines they’re paying. Thankfully, this is all online (though a bit out of date):
        http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/cafe_fines-07-2014.pdf
        http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/MY2012-CAFE-CreditStatus-GallonEquivalent.pdf

        The most up to date information on how all the OEMs are doing on CAFE vs the required standard (based upon fleet makeup):
        http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/Performance-summary-report-12152014-v2.pdf

        • 0 avatar
          derekson

          No one claimed they couldn’t meet today’s CAFE standards. The point is that the increasingly tough standards are going to require increased deployment of technology like cylinder deactivation, hybrids, etc. And FCA is incredibly weak in those areas (even their compliance EV was contract developed by Bosch).

          • 0 avatar
            anomaly149

            Most of those technologies are supplier driven, not OEM. There’s not much out there beyond body in white development that doesn’t have a heavy supplier pool to pull from, except maybe engine block development. As Magna demonstrates whenever they make a concept, the super suppliers are as capable as the majority of OEMs, if not more so.

            Add to that the fact that Sergio realizes there’s not much credit for going significantly beyond CAFE and the penalties so far for not meeting CAFE have been fairly light.

  • avatar
    heavy handle

    I get the feeling Sergio is just a spider weaving its web, calling all the flies to come around and “chat.”
    He’s bound to catch one eventually.

  • avatar
    indi500fan

    I remember the first time GM got in bed with FIAT and wound up spending a couple bil in palimony in 2005.

  • avatar
    Fred

    Just don’t understand how making this public does FCA any good. To me it sounds like desperation.

  • avatar
    GeneralMalaise

    Wow… another slow car news day…

    • 0 avatar
      sportyaccordy

      Fiat owner down on bad FCA news… in other news, water? Still wet! More after the break.

      • 0 avatar
        GeneralMalaise

        Keep finding Accords sporty, sport.

        • 0 avatar
          TEXN3

          It’s a big problem, just because you have a loan or lease on one of their vehicles doesn’t mean you have to act like a FCA homer.

          • 0 avatar
            GeneralMalaise

            Time will tell. The truth is, most of the industry is in the deep stuff. IMO, FCA is the only large automaker consistently turning out interesting cars. And as far as reliability… Ford? Been there, had that bad experience. GM? Same deal. Honda and Toyota? Owned both (still have a Highlander, rock-solid), well-made, reliable, boring cars. My Fiat experience dates back to the first new car I ever purchased (and the only car other than my ’64 GTO that I ever regretted selling) which was a 1974 Fiat X1/9. My experience with that, along with my 2012 Abarth? Nothing but positive. I only opine on cars I’ve had experience with.

  • avatar
    derekson

    Could FCA raise enough capital to facilitate a hostile takeover of Mazda? It seems like the only company with the kind of engineering and technology that FCA needs that isn’t a larger company than FCA.

    • 0 avatar
      28-Cars-Later

      This occurred to me. Mazda’s market cap is $11.62B USD. Fiat Chrysler Automobiles has a Market Cap of $20.26B.

      https://ycharts.com/companies/FCAU/market_cap

      https://ycharts.com/companies/MZDAY/market_cap

      • 0 avatar
        Chocolatedeath

        Wouldnt they need permission from Japan gov. to do that?

      • 0 avatar
        Pch101

        Marchionne wants scale and a defensive line against VAG in Europe. Mazda provides him with no help at all.

        PSA is the most logical target, and he may actually have a shot of getting it eventually. My guess is that PSA management wants the company to be more valuable (read: expensive) before negotiating a deal.

        • 0 avatar
          derekson

          I agree that PSA is the best candidate for a merger, but in the absence of that I could see an attempt to go for an acquisition to bolster the R&D, engineering, etc.

        • 0 avatar
          Steve Biro

          Yes, PSA is probably what Sergio needs in Europe. But that still doesn’t take care of his problem in Asia, where he has very little presence. Mazda would still be a great fit there.

          If we took the word “hostile” out of the equation, I could see voluntary mergers of FCA and PSA followed by a merger with Mazda as being a real solution. Hyundai would be even better but you know the Koreans would insist on being in charge.

          Everything old is new again. Remember Lee Iacocca’s dream of “Global Motors”? That’s why he bought a big stake in Mitsubishi. And Chrysler used to own the Rootes Group in the U.K. and Chrysler France was Simca.

          Yes, Sergio probably needs more cost-sharing and better engineering chops. But he’s still right about the global market being able to support only five or six independent automakers in the long-term. Some other companies admit this. Others don’t – and they are either in denial or expect to be acquirers rather than the aquired.

          • 0 avatar
            Pch101

            At this point, Marchionne has much larger problems to worry about than Asia.

            He’s playing defense, not taking the offense. Given the company’s position, that is appropriate — he needs to dedicate his limited resources to fixing his problems, not on launching expeditionary missions that he literally cannot afford.

            Mazda provides him with nothing that he needs. It would make more sense to go after Suzuki, which leads the Indian market.

          • 0 avatar
            derekson

            PSA is actually pretty strong in the Chinese market (especially their DS sub-brand-which-is-becoming-a-brand).

        • 0 avatar
          anomaly149

          PSA and Renault have too much to deal with from the French government. (see how Ghosn is doing)

          Suzuki is probably a better fit: significant market presence in Southeast Asia where there’s no Fiat, a Japanese brand for operations in Japan, no presence or overlap in the US, and likely to see far less government or keiritsu involvement than someone like Mitsubishi.

          • 0 avatar
            Pch101

            Asia is the least of his worries. He needs to shore up Europe, and no Japanese automaker can help him to solve his European problem.

          • 0 avatar
            Steve Biro

            I thought of Suzuki as well and the numbers are certainly there. But most of Suzuki’s automotive success comes primarily from the sale of very small, basic vehicles in emerging markets. That’s not certainly not nothing and Suzuki’s dealer and supply network in many of these locations would no doubt be valuable. But I’m not sure Suzuki has the engineering chops FCA may need. Remember, Suzuki tried to tie-up with VAG in order to get modern technology. That worked for – what? – two weeks?

          • 0 avatar
            unhittable curveball

            Suzuki is highly profitable and a leader in the JDM kei segment and India.

            They also make awesome bikes :)

            FCA can’t afford a ham sandwich in Brooklyn, let alone take over/merge with Suzuki.

          • 0 avatar
            Lou_BC

            Why do people assume that because Suzuki doesn’t have much of an automotive presence in the USA that it isn’t big world wide. I read that they were the 10th biggest in the world. I do not think that Suzuki would work well with FCA.

            FCA desperately needs a partner that can provide platforms to replace the aging stuff they currently have. The irony is that currently their best stuff was based upon DaimlerBenz platforms.

            Maybe FCA can merge back with DaimlerBenz ;)

      • 0 avatar
        unhittable curveball

        Mazda’s banker is Sumitomo Mitsui – a trillion $ balance sheet mega bank with direct access to the Bank of Japan’s printing press.

    • 0 avatar
      unhittable curveball

      About as likely as Donald Trump becoming the next POTUS.

      Mazda is engaged to a fiance with more than 60 billion $ in the bank.

  • avatar
    PrincipalDan

    Ummmmmmm Ms. Barra there’s an email from a Nigerian Prince about helping him retrieve his family fortune…

    • 0 avatar
      28-Cars-Later

      Best 419 reference EVA:

      https://www.thetruthaboutcars.com/2012/05/whats-wrong-with-this-picture-and-its-never-coming-back-edition/#comment-1882902

  • avatar
    RideHeight

    //adding his company had “very good prospects” for the future.

    Out comes his inner Chico Marx.

    • 0 avatar
      Lorenzo

      Aw, give Elkann a break. He was probably coached to make that announcement by Sergio.

      • 0 avatar
        28-Cars-Later

        Elkann is a billionaire, I doubt he was coached by his employee. Someone is playing a long game here.

        • 0 avatar
          Lorenzo

          Elkann is 39, the chosen heir by his grandfather of the Agnelli family, after the previous chosen heir died at 33. He was put on Fiat’s board at age 21, long before he qualified (other than being the family rep) and has leaned on Sergio the wheeler-dealer from the get-go. Inherited $billions doesn’t make you smart, but allows you to hire smart people. It’s Sergio playing the long game, on behalf of La Famiglia.

  • avatar
    Jeff S

    There’s a thriving market for Marchionne’s FCA in Cuba. I can see Fiat 500s and Dodge Darts replacing the old Chevies in Havana. He could merge with the local cigar makers and have a special Fiat 500 stogie.

  • avatar
    James2

    Since Sergio is finding it hard to run a car company, I will happily ease his burden by taking Ferrari off his hands.

  • avatar
    Jeff S

    Maybe that will be the next rouse that Sergio will use, pass himself off as a Nigerian Prince and ask Mary for money to retrieve his fortune. The tip off will be how much to ask for on the Debit cards.

  • avatar

    this prick is no more than a tool for international banksters. he is searching for a way for the money changers to strip cash and fund their lifestyles. kiss it Serge.

  • avatar
    Big Al from Oz

    Sergio knows something must be done in the medium term for FCA.

    As has already been mentioned FCA is relying of CUVs/SUVs and pickups at the moment.

    Fiat and Alfa are not doing well in the wealthier OECD nations. This is highlighted by that FCA has reduced the warranties on all but diesels and it’s Italian made product.

    Fiat and Alfa do well in developing nations because they deliver the perception of a chic Euro car that is affordable.

    Maybe FCA could take a leaf out of Nissan’s book and use Fiat as a developing nation brand name as Nissan is using it’s Datsun name.

    FCA need a Asian partner more than a NA or EU partner. Asia is the future.

    I did read PSA as an alternative, but I wouldn’t bet on this. I do think after what happen to Ghosn and Nissan the French government would scare any capitalist.

    A Japanese brand would be preferable. Mazda is a middle size business with some great engineering and design capabilities.

    Mistubishi does have a relatively long history working with Chrysler as Chrysler owned a good chunk of it.

    But, Mitsubishi isn’t the best Japanese name around. Also Mitsubishi works with Nissan and PSA already.

    FCA will have some issue with a couple of it’s big sellers in the US as well. I don’t see a bright future for the Wrangler. Future Wranglers will be different, they have to be. Diesel isn’t a good option in the US due to the lower diesel fuel standard.

    It also seems FCA can’t survive without expanding. Maybe Sergio should restructure FCA and remove the deadwood from it’s lineup first, then look at options.

    At the end of the day Sergio is stuck. Chrysler has never been a global product, except for it’s foray with Valiant in Australia and Simca in France. Chrysler products have been primarily US/Canada.

    Fiat has only been successful in a handful of countries.

    Sergio doesn’t have a brand that is global, the closest FCA has is Jeep. Making Jeep CUVs is cutting it a little thin.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • Drew8MR: My Evo VIII only made 215 whp (Mustang dyno) brand new, and no one ever complained it was slow. People are...
  • namesakeone: Why am I thinking this is the 1980s…? “The Bolt! The Bolt! The Bolt is on fire! “We...
  • Dave M.: One of the reasons I love my Outback, matter of fact. It’s a beast in our torrential downpours. And the AWD...
  • Drew8MR: Too much work. But I’ll bet the dealer would trade you in a heartbeat.
  • zipper69: Rather surprised that some enterprising Chinese manufacturer hasn’t created a variable convertor plug...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber