By on May 25, 2015

sergio-marchionne

Sergio Marchionne sent Mary Barra a detailed email in the middle of March in an effort to start merger talks. Barra, CEO of General Motors, was uninterested in the offer and rebuffed Marchionne, CEO of Fiat Chrysler Automobiles.

It was the first time the two executives had ever spoken, but it wouldn’t be the last Barra would hear of Marchionne’s merger desires.

That’s the story being told by the New York Times today, detailing the lengths to which Marchionne is going to trigger consolidation within the automotive industry.

During a routine analyst conference call on April 29, Marchionne brought his plea to other executives through the media with a 25-page PowerPoint presentation.

“I think it is absolutely clear that the amount of capital waste that’s going on in this industry is something that certainly requires remedy. A remedy in our view is through consolidation,” Marchionne said.

Marchionne’s overture of a merger with GM includes no less than 14 brands between North America and Europe, not including the many other brands each company markets in China and other emerging regions. But, to date, the overture has been played to an audience wearing earplugs.

Even with the vast number of brands, that isn’t what bothers Marchionne. Instead, it’s the amount of money poured into redundant R&D work that could be shared by multiple automakers.

“It’s fundamentally immoral to allow for that waste to continue unchecked,” he said.

[Source: New York Times]

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115 Comments on “NYT: GM’s Barra Declined Meeting with FCA’s Marchionne to Discuss Possible Merger...”


  • avatar
    Jeff Weimer

    GM and Fiat? HAHAHAHAHAHAHAHAHAHA!

    Remember how that went last time? No wonder she gave him The Hand.

    • 0 avatar

      Ms. Barra presses “mute” on the big conference phone…

      Is this a crank call ? Assistant shakes head, “no”. Raucous laughter from the assembled GM persons….

      Room regains composure.

      click..Ms. Barra again… “uh, no ?”

      If you read the article, he began his career by somehow convincing the family controlling Fiat that he could do the job. This takes “nutz”, but really, isn’t a plan. All he risked here is a phone call.

      I agree…he just wanted the vast engineering knowledge of GM. Whatever crap they (GM) make is on purpose, and to a target. You need to know a lot to get away with that. Since Chrysler has Jeep, and the 300, they need anything not an SUV or big RWD car. The 300 is getting kinda old, SRT and limited editions notwithstanding.

      Autoextremist.com has him nailed cold….

      • 0 avatar
        derekson

        He definitely wants GM engineering, as well as market share, and platforms. If you think about it, FCA doesn’t really have a great future at the moment as far as engine and platform developments. The 1.4T is a decent engine, but between that and the 2.4L “Tigershark” they have nothing, and then again they have nothing between the 2.4L Tigershark and the Pentastar V6 engines. Meanwhile other companies are rolling out 2.0T and larger turbo 4s and smaller V6 engines, while FCA sticks the same 3 engines in almost everything they build. And the big SUVs are still on a Mercedes platform, most of the smaller cars are still on platforms from the old Fiat-GM joint venture, etc.

        They need a *ton* of new engineering work within the next decade to make the next generation of vehicles. If you look at other companies, you see extensible platform architectures and new families of 3,4, and 6 cylinder turbo engines that are all designed to make producing an entire range of related vehicles with related powertrains relatively efficiently. FCA has none of this. They have a bunch of older tech almost all generated via dead partnerships with other companies, and no commonality throughout their lineups.

      • 0 avatar
        Jeff Weimer

        I can’t *wait* to see what Peter has to say about it.

      • 0 avatar
        DeadWeight

        I was fooled into thinking Pete Delorenzo had any merit as an an analyst, but admit that I was then delusional, and Pete’s closer to an anal-cyst, and that GM would be lucky to have product quality approaching Chrysler/Dodge’s quality.

        Sergio is looking to hook up with any large partner giving him larger economies of scale in an incredibly cap ex intensive industry.

        His reaching out to GM is not an endorsement of GM’s competence. It’s an understandable desire for consolidation by any means necessary in a fiercely competitive industry being driven more price war intense by the day.

        I’m confident Sergio would prefer any large partner but GM, but given the choice between no partner or a partner, would be willing to put a bag over GM’s head.

        • 0 avatar
          Jeff Weimer

          I’m gonna…have to sorta…disagree with you there.

          Sergio is complaining that there’s too much R & D going on because *he doesn’t have any*, or enough to be competitive in the future, at least. He’s rationalizing – making excuses – to try to get some other company to do it for him, because he doesn’t want to even try to spend the money necessary.

          • 0 avatar
            danio3834

            “Sergio is complaining that there’s too much R & D going on because *he doesn’t have any*, or enough to be competitive in the future, at least.”

            That’s definitely untrue. The issue is that all automakers, especially in the US, are being forced to make huge investments simply to meet the strict regulatory standards coming into force. Since all automakers have to meet them, it makes sense for them to co-develop the expensive tech that will make it there. FCA is doing it, but Sergio’s point is that the tech in question isn’t of much consequence to the customer, so why not share the cost then invest into other areas that make each brand’s products unique from each other.

          • 0 avatar
            Jeff Weimer

            “That’s definitely untrue. The issue is that all automakers, especially in the US, are being forced to make huge investments simply to meet the strict regulatory standards coming into force.”

            If that were the case, then it wouldn’t be only him complaining about it.

  • avatar
    RHD

    Instead of trying to create another GM with too many brands, Marchionne should respond to the increasing success of Hyundai, whose market share is increasing.
    Redundant R&D will lead to better innovation in the long term. Somehow I doubt that that is his real concern.

  • avatar
    DeadWeight

    Sergio is correct,

    There is MASSIVE DUPLICATION OF CAPITAL INTENSIVE REDUNDANT FACILITIES that do things such as produce vehicle chassis’, motors and other major components.

    Lets face it; vehicles are now commoditized nearly (and will inevitably be) to the point or laptops or tablets.

    What he doesn’t address or open dialogue on in his attempts to drive industry consolidation is how/why particular manufacturers would be adversely impacted by surrendering what is now their autonomy to differentiate their products (i.e. final assembled vehicles) in the eyes of the end consumer by their ability to create, stylistically or otherwise, their ONLY COMPETITIVE AND COMPARATIVE ADVANTAGES, even if they’d save massive $$$ by consolidating massive cap ex intensive manufacturing operations.

    A good successful example of what Sergio is suggesting works on a smaller scale, such as the 2.4 liter “world engine” shared by Hyundai, Kia, Chrysler (now FCA) and Mitsubishi, but going from a jointly produced motor used in different vehicles by different manufacturers is one thing, and what Sergio is now suggesting is much more complicated and nuanced.

    • 0 avatar
      28-Cars-Later

      He’s going to bring about a Super K car used by multiple firms. Oh joy.

    • 0 avatar
      formula m

      Complicated and nuanced, what are you talking about?? He is trying to make money for shareholders and realized FCA has no plan going forward and is trying to use another company’s R&D. They never decided on hybrid/electric/turbo/cylinder deactivation/etc… I wouldn’t trust Sergio at all. He just wants other companies technology and cash so he can get his asset performance bonuses and look like a the 2nd coming of Jesus to FCA.

      Your non-stop GM bashing is sad hilarious but it sounds like you wouldn’t even make Sergio wear a rubber.

      • 0 avatar
        formula m

        What is Sergio offering? Factories, sleazy dodge dealerships? Certainly not light weight platforms.

      • 0 avatar
        DeadWeight

        GM is an incoherent, rudderless, bureaucratic, sloppy, failed company, and has been since its glory era of the 60s, on a long term, nonstop decline, halted and temporarily revived by a taxpayer funded prepackaged bankruptcy allowing it a massive comparative (to competitors) advantage of being make to shed unsustainable (and incompetently created on the level of corporate governance malfeasance) legacy costs.

        GM is the Leyland Motors of the U.S., but whereas the infection that was Leyland Motors was allowed to die a natural death, GM has been sustained by U.S. ‘economic engineers’ in conduction with involuntary subsidies extracted from taxpayers.

        At present, FCA, especially the Jeep component, is on fire, and even Dodge and Chrysler are building product far superior to anything GM is currently producing, with few exceptions.

        GM is an infected, pus oozing herpes sore/genital wart, and will inevitably slide back towards insolvency, only to be able to be saved by the taxpayers, if at all, yet again, given its culturally imbedded, intractable, systemic institutions of failed leadership.

        • 0 avatar
          28-Cars-Later

          Leyland Motors was not allowed to die a natural death, it was nationalized as British Leyland in 1975. Washington literally did the same thing for a time and then divested.

          “In 1975, after the publication of the Ryder Report and the company’s bankruptcy,[8] BLMC was nationalised as British Leyland (BL) and split into 4 divisions with the bus and truck production becoming the Leyland Truck & Bus division within the Land Rover Leyland Group. This division was split into Leyland Bus and Leyland Trucks in 1981. Leyland Trucks depended on British sales as well as export markets, mainly commonwealth and ex-commonwealth markets. The early 1980s were very hard, with export sales drying up in many places such as oil-dependent Nigeria.[9] In 1986, BL changed its name to Rover Group. The equity stake in Ashok Leyland was controlled by Land Rover Leyland International Holdings, and sold in 1987.”

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

          “Despite containing profitable marques such as Jaguar, Rover and Land Rover, as well as the best-selling Mini, British Leyland had a troubled history.[4] In 1986 it was renamed as the Rover Group, later to become MG Rover Group, which went into administration in 2005, bringing mass car production by British-owned manufacturers to an end. MG and the Austin, Morris and Wolseley marques became part of China’s SAIC, with whom MG Rover attempted to merge prior to administration.”

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

        • 0 avatar
          formula m

          I liked the genital wart reference… Looks similar to Marchionne’s nose

        • 0 avatar
          Jeff Weimer

          “GM is an incoherent, rudderless, bureaucratic, sloppy, failed company, and has been since its glory era of the 60s, on a long term, nonstop decline, halted and temporarily revived by a taxpayer funded prepackaged bankruptcy allowing it a massive comparative (to competitors) advantage of being make to shed unsustainable (and incompetently created on the level of corporate governance malfeasance) legacy costs.”

          In that, at least, you agree with Peter DeLorenzo….

  • avatar
    CJinSD

    It’s fundamentally immoral employing engineers to solve problems? Of all the garbage done by the Marchiones of the world, I don’t believe that ranks. If he’s worried about moral hazards, he should do something about generations being indoctrinated to accept that leading a middle class lifestyle is immoral.

  • avatar
    Pig_Iron

    Fiat must be in trouble.

    • 0 avatar
      28-Cars-Later

      Maybe he figures since GM will never be allowed to fail a merger ensures Fiat’s long term survival?

    • 0 avatar
      dal20402

      FCA as a whole is in trouble.

      Their only successful parts are the parts that don’t fit into the future regulatory environment, and they have no plan to change that.

      • 0 avatar
        RideHeight

        They *are* doing an awesome charge at that brick wall with all their Murican Muscle pandering, aren’t they? Or maybe it’s just like a guy being a male stripper to make it through med school… quick bucks for a better future?

      • 0 avatar
        28-Cars-Later

        Seek to change the regulatory environment. I’m not saying that’s the plan, I’m just saying it could be a plan.

      • 0 avatar
        Pch101

        FCA is cash-strapped, but it isn’t on the verge of failure. Let’s not exaggerate.

        • 0 avatar
          28-Cars-Later

          Perhaps not for long, the Agnelli family sold an asset, Cushman and Wakefield, for $2 billion.

          • 0 avatar
            Pch101

            That isn’t family money. It belongs to a publicly-traded holding company called Exor of which the Agnellis are majority owners.

            I wouldn’t assume that Exor is simply going to shift cash onto the FCA balance sheet. However, it might be willing to guaranty some debt if FCA levers its way into an acquisition.

  • avatar
    GeneralMalaise

    You read it in the NYT, so it must be true.

    • 0 avatar
      RideHeight

      Did you read the original NYT article?

      This isn’t new-news. I read the original two days ago from a link in the Google news aggregator.

      • 0 avatar
        Pch101

        If it isn’t on Fox News, then it can’t be true!

        • 0 avatar
          Lorenzo

          If it’s in the Onion, you can take it seriously. So much of their satire keeps turning into reality, it’s spooky.

        • 0 avatar
          DeadWeight

          If Judith Miller wrote about “certain” Weapons of Mass Destruction held by Iraq pre-Iraq invasion (and destruction) in The New York Times, then it must have been true.

          We’ll find them one day. NYT wouldn’t/couldn’t have been so irresponsible/malfeasant/corrupt to have given a platform to Miller, her “sources” and her credible non-op/ed planted “factual” stories if they weren’t accurate.

        • 0 avatar
          GeneralMalaise

          He’ll always have Fox News to focus his 2 minutes of hate. They seem to cast a large, threatening shadow for a news entity that really doesn’t have that many viewers. Why do pch101 and his ilk feel so threatened?

          • 0 avatar
            Pch101

            When you whine and moan about the New York Times and the liburahl media, I’m sure you’re doing it out of love.

            I seriously doubt that you’ve read 1984 (the source of your Two Minutes Hate meme), but I’m sure that you’d be surprised to know that its author George Orwell was a socialist.

            (Yes, that means that 1984 is a leftist critique of totalitarianism. Oh, the irony.)

          • 0 avatar
            DeadWeight

            Response to me, Pch?

            I view Fox, CNN, The Wall Street Journal, MSNBC, The New York Times, and nearly the entirety of the main stream media (ALL – newspapers, cable stations, radio stations, magazines, etc. – owned by 6 corporations) as equally pathetic.

            There are exceedingly few non-partisan, non-dogmatic, fair & impartial relayers of factual intro action, uncorrupted by agenda-driven, ideological entities, existing in the institution that once was the “media” in the U.S. today.

          • 0 avatar
            Pch101

            Unless you were butchering and misinterpreting the Two Minutes Hate in 1984, I wasn’t replying to you.

          • 0 avatar
            DeadWeight

            Fair enough.

            As an aside, now that I’ve let my feelings about the NYT be known, do you agree the Judith Miller sales pitch (spawned by PNAC) was one of the greatest journalistic tragedies (or crimes) in American Media History, given that it helped sway public opinion towards a pro-Iraq invasion position based on a false pretext of Weapons of Mass Destruction?

            (A tragedy and journalistic failure that The New York Times has barely acknowledged, let alone apologize for or issue guidelines for revisions to its source vetting process.)

          • 0 avatar
            Pch101

            Miller is now at Fox News and associated with the Manhattan Institute, which should make it clear that the NYT doesn’t just have liberals on the payroll.

            Yes, Miller’s reporting was bad. The NYT isn’t perfect — far from it — but it remains the gold standard for American print journalism. There’s no comparison to Fox — if Goebbels was alive today to run a media outlet, it would resemble Fox and not the New York Times.

          • 0 avatar
            DeadWeight

            Wow. You are giving new meaning to spin.

            Miller’s MOTIVES were bad, not merely her reporting-

            -she was using the front page of the Times to pitch Cheney’s (via Scooter Libby) propaganda (knowingly false information regarding Iraq’s alleged WMD Program) to swing public opinion towards a pro-Iraq invasion.

            Your definition of “Gold Standard” of journalism is an incredibly weak threshold given that The Times let Miller run so fast & loose on such a matter of incredible gravity.

          • 0 avatar
            Pch101

            Er, I included her name, Fox News, and the Manhattan Institute in the same sentence. I thought that the point that I was making was obvious.

        • 0 avatar
          GeneralMalaise

          “So much of left-wing thought is a kind of playing with fire by people who don’t even know that fire is hot.” – George Orwell

          That fellow sure had your number, pch…

          • 0 avatar
            Pch101

            “And the only regime which, in the long run, will dare to permit freedom of speech is a Socialist regime. If Fascism triumphs I am finished as a writer — that is to say, finished in my only effective capacity. That of itself would be a sufficient reason for joining a Socialist party…

            …One has got to be actively a Socialist, not merely sympathetic to Socialism, or one plays into the hands of our always-active enemies.”

            -George Orwell

            “(A) Socialist United States of Europe seems to me the only worth-while political objective today.”

            -George Orwell

            He must have been one of those right-wing socialists. Or something like that.

  • avatar
    Big Al from Oz

    Why doesn’t Sergio go to Mazda and make an offer? Mazda in the longer term is ideal in the global market.

    If GM and FCA were to merge, you would then see Ford attempting to merge with a large player as well.

    This will rationalise the industry, which means cheaper products.

    Why would GM want to go to bed with FCA? FCA’s success lies with it’s NA operations at the moment.

    Maybe the auto industry should become more like the aviation industry. You buy a chassis, then fit it out with a drivetrain of your choice. Mix’n’Match!

  • avatar
    lOmnivore Sobriquet

    Nice to learn about it.
    Any relation with cars ?

    • 0 avatar

      None at all, other than the fact the two people mentioned are CEOs at two of the largest automakers on the planet and one of the people mentioned really wants to merge with the other which could trigger all sorts of change with product and the automotive industry in general.

      Nope, nothing to do with cars.

  • avatar
    SCE to AUX

    If GM and FCA merged, I’d never buy another Fiat again.

  • avatar
    redliner

    GM is a good choice for r&d alliances if only to gain access to GMs treasure chest of patents.

    Unfortunately, in this hypothetical GM/fiat merger, Fiat comes off as the desperate manipulative partner.

  • avatar
    oldowl

    “Uninterested” means not interested. “Disinterested” means impartial. Maybe Barra is both, but more likely she feels the former toward FCA and Sergio.

  • avatar
    elimgarak

    If Sergio offered to give Barra an Italian Stallion pumping, she would certainly reconsider.

  • avatar
    Duaney

    We need more diversity in the auto industry, not less. Already Oldsmobile and Pontiac are gone, Mercury is gone, Plymouth is gone, and each of these separate divisions came up with innovative ideas of their own. Look at the contributions of the independent car companies such as Nash, Hudson, Packard, Willy-Overland, Studebaker, and many more, if only we had their idea’s today! I don’t know if Tesla will be in for the long run, but already there are great innovations from them. I hope GM stays independent.

    • 0 avatar
      RideHeight

      I think diversity is an anachronism held over from the days of early mass-production and rooted in the previous era of craft production. It doesn’t survive well in the maelstrom of yearly multi-million units demanded by current mass/lean production and their economies of scale.

      Unless you’re willing to pay Morgan money.

    • 0 avatar
      SCE to AUX

      All of those brands deserved to die.

      • 0 avatar
        Lorenzo

        Not really. Several were starved to death, and some, through mergers, still exist. Nash, Hudson, Willys and AMC were all folded into Chrysler and now FCA. The Hudson Hornet begat the AMC Hornet, which will Beget the subcompact Dodge Hornet in 2018 +/-.

    • 0 avatar
      LectroByte

      > We need more diversity in the auto industry, not less. Already Oldsmobile and Pontiac are gone, Mercury is gone, Plymouth is gone, and each of these separate divisions came up with innovative ideas of their own.

      Seriously, Mercury? Plymouth? Olds? Pontiac? Poor old noob thinks it’s a Cadillac…. all those brands you mention were just the same lame shit under a different label.

      Chrysler should have been killed off in 2008, other than Jeep. Jeep could have been sold to GM or Ford, to continue the Jeep curse and eventually destroy another company, and the rest of the crap just forgotten about, and the American car market would be so much better off for it. But Obama didn’t want to do that, and here we are.

      • 0 avatar
        bill h.

        Except that it was George W.’s administration that did the bailout.

        • 0 avatar
          LectroByte

          Chrysler should have been killed off in 2008, other than Jeep. Jeep could have been sold to GM or Ford, to continue the Jeep curse and eventually destroy another company, and the rest of the crap just forgotten about, and the American car market would be so much better off for it. But George W didn’t want to do that, and here we are.

          • 0 avatar
            DeadWeight

            WTF??!!

            Chrysler (now FCA) has grown sales way faster than GM, once one adds Dodge, Chrysler, Jeep & RAM sales together, as a % of prior total pre-crisis sales, vs GM.

            Many in this thread imply that FCA is somehow struggling when it’s in fact booming, both in nominal terms and relative to GM.

            Regardless as to how one views Marchionne, or his motives, GM isn’t doing better than FCA by nearly any metric, nor does it somehow have some form of stellar engineering competence.

            Sergio is pressing a message of consolidation, and a tie-in with GM to share costs isn’t some sort of prize when considering that there are Toyotas and VAGs in the world, too.

  • avatar
    dal20402

    Desperate pleading to Barra is not Marchionne’s finest moment. He comes across as exactly what he is: the CEO of a company that quickly threw together a few products that generated short-term profit, but has no long-term plan and no money to put one together, and is casting desperately around for a savior.

    This comment thread, though, is even further from the B&B’s finest moment.

    • 0 avatar
      RideHeight

      “This comment thread, though, is even further from the B&B’s finest moment.”

      What, you don’t think Sergio’s an Italian Stallion?

      Personally, I think he’s an agent of the Jesuits as Dan Brown’s next book will reveal.

  • avatar
    DownEaster

    I hope that Marchionne isn’t trying to unload Fiat Chrysler then “cash out” and retire. I hated to see Chrysler be taken over by Mercedes then hollowed out and sold as a shell of a company to Cerebrus. Hope this isn’t happening again with the new FCA. Executives get rich on the merger and the company ends up being a shadow of its former self.

  • avatar
    cbusdude

    .. More like, how much does Jeep cost to take off your hands?

    • 0 avatar

      If it weren’t for Jeep, and the one product portfolio that has both quality and consistency, would Chrysler even still BE a company ?

    • 0 avatar
      Scoutdude

      Jeep is the big prize in the FCA portfolio. When Damiler was trying to pedal Chrysler they had lots of offers for Jeep, the one part they really wanted to keep. First they just wanted to sell the Chrysler brand and maintain Dodge for the trucks and Jeep. Then they tried Dodge and Chrysler while wanting to retain Jeep. Finally they put Jeep on the block since no one wanted the other brands and made it an all or nothing package.

      Of course some say Jeep is a cursed brand, Kaiser was gone not too long after they purchased it. AMC ended up getting sold to Renault, who then sold the mess to Chrysler. Chrysler ended up getting sold to Daimler who couldn’t unload the mess for the longest time and it seriously hurt Daimler. Daimler unloaded it on Cerebus and of course most recently the US gov’t seized Chrysler and payed Fiat to take the mess. Coincidence? Maybe, mabey not.

  • avatar
    Lou_BC

    Perhaps it was a mizunderstanding?

    Marchionne wanted to merge with Barra……………not FCA with GM

  • avatar
    Lou_BC

    FCA is like the ugly step sister and daddy doesn’t have a big enough dowry to get some sap to take her off of his hands!

  • avatar
    anomaly149

    He’s not wrong, name another industry where the top dog has at best 10% of the new market.

    The biggest problem is finding a good match for FCA. The Fiat-Chrysler merger was an excellent one, since Chrysler had no international presence, few small cars, but immense name recognition (Jeep), while Fiat is omnipresent in the developing world and nonexistent in the US but had no large vehicles. Now they’re a real full line manufacturer with real global presence. Whomever they merge with is looking at killing off nearly half their nameplates and brands while closing a lot of factories.

    Ram and Jeep might almost be worth it to Toyota or Hyundai though….

    • 0 avatar
      SCE to AUX

      +1

    • 0 avatar
      Lorenzo

      Toyota would have stepped up if the core of the old Fiat conglomerate didn’t have over $30 billion in accumulated debt to merge with Chrysler. Only Toyota could actually afford it, but as you said, it’s ALMOST, but not quite worth it. Not when Toyota could pick up Ram/Jeep for far less in liquidation, and let FCA creditors left holding the bag.

      • 0 avatar
        Lou_BC

        Lorenzo – I can’t see Toyota ever having an interest in anything FCA builds especially in the Chrysler division.

        • 0 avatar
          anomaly149

          Lou, Ram and Jeep are worth most of Toyota’s whole North American operations on their own (if not more), and Fiat has Euro luxury chops (various marques) that Lexus has wasted a lot of money failing to obtain. Plus Chrysler owns the NA Minivan segment, a still profitable endeavor.

          There’s something fairly big there if anyone wants to bite off the task of closing down a lot of factories in some fairly combative union zones.

  • avatar
    mdensch

    Nash-Hudson, Studebaker-Packard, AMC-Renault, AMC-Chrysler, Daimler-Chrysler, etc, etc.

    History would seem to show that mergers fail to produce positive results, or at least can’t be counted on to do so. Whatever problems drive one or more of the merger partners into the deal will still exist post-merger. If the resources to solve the problems weren’t there before, they aren’t like to be there after.

    [Climbing up on a soap box] The real problem is the corporate mentality that has evolved over the past generation or so which holds that a corporation is only successful if it continues to increase profitability and shareholder value year over year—and the ends will always justify the means. The goal of the typical corporation is not to build the best product or provide the customer the best possible experience, it is to make more money than the year before. Period. FCA is running out of ways to increase revenue so it’s turning to the notion of merging.

    Building cars is hard work and always will be. A merger isn’t going to change that.

    • 0 avatar
      anomaly149

      ZF is doing well, the Witte-Adac-Strattec-VAST hydra is doing excellent, GM is itself a merger, Textron is more than just kicking, and Renault-Nissan is (when the French government allows it) swimming along reasonably. And, of course, Nucor is still around, a B&B campfire tale if there ever was one. There are good mergers, and FCA looks to have been one.

    • 0 avatar
      Lorenzo

      Nash and Hudson BECAME AMC and added Willys Jeep before merging with Chrysler. Until Bob Eaton, a GM lifer, was chosen to replace Iacocca instead of Bob Lutz, and engineered the “merger of equals”, Chrysler was selling nearly 3 million cars a year and making $billions in profits.

      The key was taking on the AMC team. They had done so much with so little for so long at AMC that with their arrival, their system revolutionized project development at Chrysler, adopting the same system Toyota used, including profit sharing with suppliers who contributed their own design and engineering skills. When the M of E hit with Daimler’s top-down, bull-headed management taking over, the best teams and individuals left in a massive exodus that destroyed Chrysler.

    • 0 avatar
      NoGoYo

      Man, that Studebaker-Packard merger. I dunno how it was even LEGAL for Studebaker to misrepresent their corporate health as much as they did.

      Of course, now we’ve got the new Studebaker-Packard merger in Kmart and Sears, another pair of companies that won’t exist in a few years.

    • 0 avatar
      tonycd

      Well said, mdensch.

  • avatar
    Dave W

    After reading the article, it seems his two stated concerns are for over capacity and redundant R&D. That being the case I wonder if he will try to solve it by going to other auto makers and telling them if they can all get together and give him a raise over the 30 million a year FCA is paying he’ll tank it, thus helping with both issues.

    • 0 avatar
      Lou_BC

      Dave W – I suspect that R&D is where FCA is lacking. They have the engineering capacity to build forty new million dollar Ferrari’s but not build a million new 40,000 dollar Ram pickups.

      • 0 avatar
        DeadWeight

        RAM is stealing pickup sales from both GM & Ford at a rate never before seen, and if anything, FCA could and should expand production capacity of RAM.

  • avatar
    Lichtronamo

    This was Sergio’s plan all along, especially related to Chrysler, to find a partner and merge. RAM was split from Dodge such that along with Jeep a merger with Fiat would be more interesting for potential partners.

    I could see Carlos Ghosn at Renault/Nissan wanting RAM and Jeep but not the rest.

    • 0 avatar
      28-Cars-Later

      Per Financial Times:

      “A sale of Cushman & Wakefield will raise expectations that the Agnelli family may be building a war chest for acquisitions, especially in the context of comments made by Fiat Chrysler chief executive Sergio Marchionne that the auto industry is in need of more consolidation.”

      http://www.ft.com/intl/cms/s/0/9150e59c-bcd0-11e4-a917-00144feab7de.html

      The deal was struck on May 12. If the Agnelli family planned to invest this $2 billion in FCA, perhaps they will *buy* someone as opposed to a merger? (or adding cash to induce a merger) Perhaps instead, Fiat needed a liquidity injection as things aren’t as rosy as they seem?

      http://www.independent.co.uk/news/business/news/agnelli-family-adds-2bn-to-fortune-with-cushman–wakefield-sale-10243064.html

      • 0 avatar
        derekson

        How much would it cost to buy Mazda? Mazda has good R&D and engineering, along with SkyActive engines and platforms that would give FCA a good base for future product development. But Mazda lacks the size and market share to be a merger target, really. I think Mazda would have to be structured as an acquisition just due to the relative size of the two companies.

  • avatar
    johnny ringo

    The last time General Motors and Fiat tried some kind of a joint venture, General Motors ended up giving Fiat two billion dollars to go away. Maybe Sergio is trying to repeat that deal again in the hope of getting another cash infusion. Hopefully, GM has learned from its errors; it sounds like Ms. Barra wants no part of Sergio or his schemes.

  • avatar
    TonyJZX

    I actually like a lot of FCA cars, even more than GM.

    However I find all this very embarrassing and demeaning for FCA. Why would they ever even consider this? GM of all places?

    Would FCA be better off streamlining or getting rid of or selling unproductive assets?

    • 0 avatar
      28-Cars-Later

      It just occurred to me GM of all places possibly because of Opel and the consolidation of Opel and Fiat for European market share. Pch and others were talking about this weeks ago.

    • 0 avatar
      Pch101

      At this point, Fiat doesn’t have much to streamline. It needs more customers.

      Yes, I suspect that any partnership with GM would be centered around Opel-Vauxhall. But now that GM has backed away from its global Chevy/ Koreacentric strategy, it now sees Opel as being worth keeping — I doubt that Marchionne is unaware of this, but it can’t hurt him to ask.

      I suspect that the real target is PSA. That might actually be doable at some point.

  • avatar
    Sjalabais

    A crappy car behemoth like that would probably face obstacles also from competition watchers in the governments concerned?

  • avatar
    TW5

    FCA’s only hope is to lobby for a $1/gallon federal gasoline excise tax as a replacement for CAFE 2025.

    They don’t have the technology portfolio to reach the standards. It’s not even close.

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