By on June 26, 2015

Fiat 500 At Tuscany Wedding Circa April 2014

FCA CEO Sergio Marchionne says he’s not ready to court General Motors’ shareholders for a merger, while Ford’s Mark Fields prefers no mergers at all.

Though Marchionne was said to be gathering allies in the finance field to help persuade GM’s investors to consider consolidation — having been rebuffed already by CEO Mary BarraReuters says he stated the following while on the sidelines at Wednesday’s unveiling of the Alfa Romeo Guilia:

We are very far removed from any of those scenarios today. None of my staff has spoken to them, I haven’t spoken to them, nobody is under instruction to speak to them.

When asked about the possibility of going hostile in his ongoing need for industry consolidation, Marchionne’s reply was to proclaim those who “kept wasting capital” were the ones meting out the hostility.

One such individual would likely be Fields. Per The Detroit Bureau, the Ford CEO told reporters attending the annual Further With Ford conference mergers with any automaker, let alone FCA, were out of the question:

We have no interest or plan other than accelerating the One Ford Plan; delivering product excellence and driving innovation in every part of our business. We are never going to take our eye off of being a great developer of cars, trucks and utility vehicles.

Fields added he would consider ways to improve his company’s overall business model, stating it was important for Ford “to open up that lens” in order to lead the industry towards betterment.

(Photo credit: Monica Arellano-Ongpin/Flickr/CC BY 2.0)

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45 Comments on “Marchionne Not Yet Ready For GM, Fields Not Interested In Any Merger...”


  • avatar
    hf_auto

    “When asked about the possibility of going hostile in his ongoing need for industry consolidation, Marchionne’s reply was to proclaim those who “kept wasting capital” were the ones meting out the hostility.”

    Either the question went way over his head or, more likely, nice job playing dumb to skirt the question.

  • avatar
    Jeff S

    Sergio Marchionne’s best prospects would be to approach Tata or Geely for a merger. Tata and Geely would be interested in Fiat Chrysler’s existing dealer network which would give them access to the American and Canadian market. As long as GM is making money there is no reason for them to merge especially with a weaker competitor. Chrysler needs GM or Ford more than either of them would need Chrysler. Ram and Jeep are the most valuable brands Chrysler has. Chrysler will probably merger with another company but it will not be GM or Chrysler. Renault or Nissan could be a candidate especially since both are joined together. The right merger would be beneficial to Chrysler and to the company that acquired them.

    • 0 avatar
      Hummer

      Tata and Geely bring nothing to the table, and both of them severely hurt the reputation of FCA, whether it’s the buyers looking for the Euro offerings, or those in America looking at the Chrysler side of offerings. Either way any Chinese or Indian company would be a considerable waste of effort that could only hurt FCA.

      Take a look at the Ag industry that Fiat has combined, that’s where you should expect any auto mergers to go.

      Either way, the Chinese auto industry has a lot of consolidation to happen internally before any intelligent company sees fit to merge with them. Not to mention the completely adverse attitude the Chinese have taken to original ideas and quality products.

      • 0 avatar
        TheBlueSoap

        Tata would bring Land Rover and Jaguar to FCA. Geely would bring Volvo. FCA could use these architectures and engines for new vehicles/current vehicles.

        • 0 avatar
          Hummer

          FCA is positioning Jeep against Land Rover, and it has potential to out Rover – Land Rover, Jaguar should have went away 20 years ago, and Volvo equally has nothing going for it.

          I double down that Renault Nissan is the only partnership that makes sense.

        • 0 avatar

          I don’t think so. Jaguar, Land Rover and Volvo are all ex-Ford companies that continue to utilize Ford platforms and parts. Ford might end its agreement to supply components to these companies if they wound up in bed with FCA…similarly to how GM threatened to stop supplying platforms and components to Saab when it was considering a Chinese suitor (since GM makes big money in China).

  • avatar
    seanx37

    I don’t really understand why GM would be remotely interested. Jeep, sure. But nothing else. If GM were to buy FCA, wouldn’t they immediately dump everything BUT Jeep? And hundreds of thousands of US jobs?

    • 0 avatar
      heavy handle

      For one thing, FCA has better car platforms (and arguably better pickups, but “them’s fightin’ words”).

      GM’s profits all come from pickups, everything else (other than defense) is a bust right now. They are retreating from Europe, Russia and Australia, they are considered a cheap brand in China, they don’t have a serious premium or luxury brand worldwide (or even in the US where Cadillac is outsold by Acura).

      On the other hand, FCA is growing fast in Europe and North America, and they’ve always been strong in South America. They have several luxury brands with great name recognition and growing sales. Most important, they have very modern platforms in most segments.

      GM execs are talking tough right now, while they cash their bonuses from Silverado sales. That won’t last. What happens when Ford’s F150 production capacity catches-up? They’ll have to slash their prices to keep the metal moving: they are years behind in powertrain, chassis and ride. Do you really think that buyers want a V8 that isn’t as strong as their competition’s V6?

      Americans sometimes get fooled into thinking that there’s only three car brands in the world. Fact is, the “big 3” aren’t all that big. GM moves a lot of volume, but 95% of that’s cars nobody would buy if they weren’t the cheapest thing on wheels. There’s no money in that. The other 5% is Silverados that sell at a huge profit to urban cowboys. Take away cheap credit and/or cheap gas and that golden goose is cooked. It’s happened before, it will happen again.

      Now’s the time GM should be planning for the future. Partnering-up isn’t a bad option, given their track record for fixing problems in-house.

      • 0 avatar
        th009

        “FCA is growing fast in Europe and North America”

        The only thing that’s growing in Europe for FCA is Jeep. Alfa and Lancia are still on life support, and Fiat is struggling apart from the blip they got from the 500X intro.

        • 0 avatar
          heavy handle

          Jeep’s seeing double-digit growth in Europe. Fiat is beating the market as the Mediterranean economies recover and Germany stalls.

          Alfa has just been re-launched, no numbers yet. They will take a bite out of Audi/BMW/Mercedes, but no-one knows how big.
          Lancia has retreated to one model in Italy. We won’t see them again, if ever, until FCA sees the opportunity to sell premium FWD cars.

      • 0 avatar
        28-Cars-Later

        “Do you really think that buyers want a V8 that isn’t as strong as their competition’s V6”

        The LS V8 is near legendary less than twenty years after its introduction, and its maybe the only thing worth buying in the truck. I could see buyers choosing it over the DOHC Pentastar and DOHC Ecoboost, but I will say the Ford and probably the Dodge are better “trucks”.

        • 0 avatar
          heavy handle

          Talking about the 5.3. The ads claim “best in class V8 fuel economy,” but that’s just a way of saying “our competition gives you similar power and better mileage from their V6” or, even more succinctly “our V6 is still the same gas-guzzling lump we used to put in the Chevy Astro.”

          One should expect a bit more from GM’s cash cow. The Ford and Ram V6’s are pretty good, no major issues. There is a segment of the buying public that has to have a V8, but I’m sure that there’s a bigger segment that wants an extra 20 in their pocket every week from fuel savings, with no performance/reliability hit.

          • 0 avatar
            danio3834

            “our V6 is still the same gas-guzzling lump we used to put in the Chevy Astro.”

            It’s not the same as the old 4.3l. It’s a cut down LT V8 design.

          • 0 avatar
            heavy handle

            Danio.

            I stand corrected. It’s still a 90 degree V6 that’s not a world-beater in performance or economy.

          • 0 avatar
            28-Cars-Later

            I realize we are talking LS V8 vs V6 but its worth noting GM did introduce a new V6 in 2013 and no longer uses the SBC derived 4.3 which was sold for decades.

            “This engine family was phased out in early 2014, with its final use as the 4.3 L V6 engine used in Chevrolet and GMC trucks and vans. Its phaseout marks the end of an era where the first generation motor was based on the Small Block Chevrolet dating back to the 1955 model year. A GEN V variant entered production in late 2013 which is based on the LT1 small block used in the 2014 Chevrolet Silverado, which the present day 4.3 is based on.”

            https://en.wikipedia.org/wiki/General_Motors_90%C2%B0_V6_engine

            “In addition to new exterior designs, a new engine — the 4.3-liter EcoTec3 V6 — will be available to complement V8 options.

            This new V6 engine produces 285 hp, 305 lb-ft of torque and a towing rating of 7,200 pounds, which GM claims is best among standard V6 truck models. The engine also helps the pickups achieve a best-in-class payload rating of 2,108 pounds.

            GM also claims that the EcoTec3 engine technology matches the Ram V6’s city fuel economy of 18 mpg while the 2WD models are capable of 24 mpg (18 mpg for city, 24 mpg for highway all across the board for regular, double and crew cab models). Keep in mind that these estimates are for the bare bones models without all the frills and options.

            V6 trucks are an increasingly viable option for those who want decent gas mileage but require substantial towing ratings to meet their daily needs. According to Jeff Luke, executive chief engineer for GM pickups, “our V6 has torque where you need it to get the job done, with 230 lb-ft of torque available at 1,200 rpm, and more torque available from 2,400 to 5,300 rpm than competitive V6s make at their peak.””

            http://autoweek.com/article/car-news/gm-reveals-new-43-liter-v6-ecotec3-truck-engine-specs-and-details

            Additional: In my view, a truck is not a vehicle to be purchased for reasons of fuel economy. I do think its pretty cool something like the LS V8 with cylinder deactivation can achieve close to another truck’s V6, but to me $20/week doesn’t make me desire a small V6 for the long haul. I’m a buy and hold owner and the LS drivetrain will hold up over time. What I would really like to see is an actual small truck (Colorado is not small, its nearly a GMT900) sporting the LS V8. Because if you reduce the size of K2XX 2/5ths and lose nearly 2,000lbs fuel economy would shoot up. The curb weight of the previous Colorado was 3,366-4,218lb and its 5.3 4×4 model did 14/19 with a 4spd and no cylinder deactivation (2WD 15/20).

            CURB WEIGHT, 5218 lb

            http://www.motortrend.com/roadtests/trucks/1306_2014_gmc_sierra_1500_slt_crew_cab_4wd_first_drive/

          • 0 avatar
            Lou_BC

            I do believe that GM chose the same displacements for the Ecotec motors as a way of living off the SBC “legend”. Customers find comfort in thinking that the engines aren’t much different even though they share little with the previous Vortec.
            They can brag about “best V8 fuel economy” because the 5.3 compares to Ford’s thirsty 5.0 and the larger 5.7 Hemi, 5.6 Nissan, and thirsty 5.7 I-Force.
            I’d seriously consider a Chevy as my next truck. I’d even consider a Ford. Ram doesn’t even register on my radar since you have to get a plane jane fleet queen to get the same capacity as a full bling F150 or GM truck.

  • avatar
    Steve Biro

    Renault-Nissan isn’t a bad idea for an FCA partner. But I always thought Peugeot was the company Sergio was really looking at. Nothing has changed over the past few months to change my opinion. But would the French government allow a merger with either to happen? Other than one of those two, a Chinese firm would be most likely.

    It’s fun to speculate but none of us really knows what’s going on. I still think, as of right now, that Sergio is smarter than he is desperate.

    Finally, let’s not forget that, ultimately, Marchionne is right about consolidation being necessary in the auto industry. In fact, many auto executives openly agree with him in a general sense. It’s just that they think their particular company is exempt. GM thought it was fine up until perhaps a few months before they declared bankruptcy.

    • 0 avatar
      Hummer

      Renault Nissan is who I was thinking, Nissan has all your boring compliance pods, which brings the two full circle with FCAs interest buzzing fun vehicles.

      So long, that is, that Ghosn is no longer in any position of power, he seems to only approve CVTs, tiny engines and boring designs.

      However, neither companies are known for their stellar reliability, but at the end of the day, none of those companies are In the position that they would want to merge.

    • 0 avatar
      Pch101

      “It’s fun to speculate but none of us really knows what’s going on.”

      Marchionne is pretty good at stating about half of what he is thinking.

      He isn’t lying about his concerns for scale and managing R&D costs. What he isn’t saying is that his greatest concern is FCA’s position in Europe and the difficulty that it has in competing against the Germans, particularly VAG.

      That makes PSA the obvious choice. It has a lot of the same sort of problems in Europe that FCA has, but without the advantage of a US presence. Both sides stand to gain from a merger or partnership of sorts.

      I suspect that part of his urgency comes from his timeline for retirement. He wants to leave on a high note and leave behind a legacy, which requires that he get this process started soon.

    • 0 avatar
      alexndr333

      Steve, You wrote, “…Marchionne is right about consolidation being necessary in the auto industry.” Consolidation is Marchionne’s answer to the underlying problems of over-capacity and the need for greater economies of scale in the face of greater regulations around the world (fuel economy, air quality, pedestrian safety, crash protection, etc.) However, his solution is not the only one – it’s just the only one that makes sense to him.

      As leader of the weakest large auto-maker in the world, he cannot face the other solution, which is to reduce capacity by closing the least healthy players. GM and Chrysler got a pass from the Feds, as do the Europeans and Asians from their governments and nationalistic consumers on a continuing basis. Except Italy, where the Italians are not buying much of anything.

      So, instead of admitting that Fiat should be allowed to wither and die, Marchionne plays the only card he has: Shouting merger from the rooftops and hoping someone he likes will listen. So far, it’s all been the chirping of crickets.

  • avatar
    wmba

    The Marchionne Industry Crowd Sourcing Automotive Appeal for FCA Relief continues.

  • avatar
    Jeff S

    I should have not said that Geely or Tata would be interested in a merger, more like buying Fiat Chrysler or pieces of Chrylser. I don’t think Chrysler is ready to be bought out but if things get worse then that might be their only option. Marchionne is correct in his assessment of the auto industry that more consolidation is in order. Auto companies have become more global and the costs to design and retool have to be shared on a global basis. Nissan Renault would be the best fit for Fiat Chrysler. As for CVTs they will become more the norm like it or not. There is a limit to how many gears that can be put in an automatic transmission and the cost to develop and produce a CVT is much less. Most consumers will not care how many gears an automatic transmission has as long as they can find the “D”. Most people who buy a vehicle are clueless unlike many of those who comment on TTAC. A boring appliance like vehicle that starts every time and requires minimum maintenance is what most want. Add electronic screens, heated leather seats, rear backup cameras,and power everything will satisfy most consumers.

  • avatar
    GeneralMalaise

    And they call Jackson Browne “Johnny-One-Note”… jaysus!

  • avatar
    jimbob457

    Hmmm… Every player is eying every other player evaluating a possible deal. Most likely, no major deal will go down until the next cyclical downturn in the car business.

    Usually, the losers see they don’t have the resources to update their product lines, and they sell out. Sometimes, two or more losers will combine in a last hope for survival (Studebaker-Packard).

    • 0 avatar
      Xeranar

      This is pretty accurate, much of the excess capacity of the major players were shed during 2008-2010 and the industry is humming along in profits with their short-term management styles established they’re unlikely to suddenly want to enter a merger and FCA isn’t exactly a weak competitor so much as it has too many redundancies for a truly huge maker to want to get into bed with them. More badge engineering is the inevitable future and unless FCA gets involved with Nissan/Renault they’re likely to find a willing member until the market gets desperate.

      Ford actually could be a decent merge partner IF they simply trimmed away Dodge and Chrysler, kept Jeep and used Fiat to help design newer compact and subcompact designs. But that’s pretty much everybody’s plan for FCA unless they’re Daimler-Benz and we know how well that went the first time.

      • 0 avatar

        “Ford actually could be a decent merge partner IF they simply trimmed away Dodge and Chrysler, kept Jeep and used Fiat to help design newer compact and subcompact designs.”

        You have to be kidding right? Ford has a superior compact and subcompact car designs in the form of award winning world best selling Focus, Fiesta and Ka. FIAT can only dream about it. And Ford owned Mazda if it would not be enough

        • 0 avatar
          Scoutdude

          The Ka is the Fiat 500 and is built at the Fiat plant alongside the 500.

          The first Ka was a cut down Fiesta though.

          But I do agree that overall Ford has a far superior range of midsize to small cars than Fiat. Fusion/Mondeo and Focus are far superior to the 200, Dart and the Alfas they are based on. Fiat doesn’t have a direct competitor to the Fiesta and the Ka Ford certainly could make a next generation Fiesta/Ka platform that would serve both segments. I do think that if the Ka is kept around that will be the way it goes since Fiat is such a mess that they would want to distance themselves from Fiat rather than continue the partnership let alone get further in bed with what is currently the most desperate automaker in the world.

          As you said if Ford was really interested in outside help with their smaller range of cars the would increase their ownership level in Mazda again. Ford still has a sliver of Mazda and they still have a common product in their mid size trucks sold elsewhere.

        • 0 avatar
          Eyeflyistheeye

          “You have to be kidding right? Ford has a superior compact and subcompact car designs in the form of award winning world best selling Focus, Fiesta and Ka. FIAT can only dream about it. And Ford owned Mazda if it would not be enough”

          This.

          Ford has already stomped on all the mass-market European manufacturers in their home markets aside from the VAG Group. The Fiesta is the best-selling car in Europe and the Focus is the best-selling car in the world.

          While those two don’t sell well in North America, it seems that Ford is sticking with Mulally’s game plan to bolster their compact car lineup and attract younger, non-typical Ford buyers (worked on me!). Not to mention they’re shrewdly using the ST/RS line to establish themselves as the leading compact car manufacturer in North America.

          The FIAT Punto, which competes against the Fiesta, is horribly outdated and dates from the GM-FIAT era, and the FIAT Bravo, the competitor to the Focus, was discontinued after sluggish sales. What’s scary is that the Bravo was discontinued last year and replaced by a Dart hatchback only outside of Europe. It is not a good sign for FIAT not to have a Golf/Focus challenger.

          That means they’re really relying on Chrysler and North America to prop up their business.

  • avatar
    Jeff S

    The average car buyer is not an enthusiast,they want a reliable vehicle with all the modern features. Why do you think Toyota is the top selling brand? I doubt most who buy Toyotas are buying them because they are exciting vehicles. Its not that most car manufacturers are giving the average buyer the finger but that they know as long as most people have a reliable vehicle that doesn’t require constant maintenance then most are happy. After a few years many will trade for a new one. This is one reason why leasing is popular.

    • 0 avatar
      28-Cars-Later

      I always saw leasing as the result of people struggling to purchase cars in a traditional manner (i.e. 20% down and finance over 48 months). Over the years wages have stagnated in real dollars and car prices have continued to rise along with everything else.

    • 0 avatar
      heavy handle

      “Why do you think Toyota is the top selling brand?”

      Because they took third world markets seriously decades before Americans and Europeans did. They established dealership and parts networks in countries where other brands make you wait 6 months for brake pads. They kept improving their product while others (esp. Land Rover) did nothing.

      It’s a long-term bet that paid-off big once those countries started growing. All the while GM was picking its nose, arrogantly telling customers the world over to “take it or leave it,” which they did.

  • avatar
    Jeff S

    Leasing is a way of getting people struggling to purchase a car but it is also a way of getting repeat business at the end of the lease and a supply of late model used cars which can be more profitable than selling a new car. Better for the dealer to lease a car for 2 to 3 years than to sell a car with zero or low interest rates for 60 to 72 months. You don’t want the customer to keep that car too long.

  • avatar
    CincyDavid

    We have leased a couple of Hondas recently, and started getting mailers from local Honda dealers within a year of starting the leases, wanting to get us out of the lease, and into a new one, so they could have the used car. I have to imagine they DO make more money on gently used, low mileage cars, as opposed to $199 leases on new cars. I’m not convinced I like leasing, but if I can lease an Accord for $230 a month, for 36, with no money down, why would I buy one for $450 a month, for 60 months, and have to pay $1750 sales tax when I buy it? These cheap leases make it very palatable to get a new ride every couple of years. And it probably needed nothing but oil changes, wiper blades and tires during the lease…it never gets into “real” repairs.

    On the subject of FCA, this should be interesting. Mergers never seem to be mergers, as much as takeovers pretending to be something else. The only FCA product I would even consider would be a Jeep Wrangler, and that’s only because there is no direct competitor. If the Indians or Chinese get involved, I truly doubt the average buyer would know or care. If that gives Tata or Geely a way into this market, more power to ’em.

  • avatar
    Jeff S

    @CincyDavid–That is exactly why the dealers want you to lease, a low mileage Honda that is a couple of years old with low mileage is much more profitable than a new Honda. The lease cars can be sold as certified. We bought a CRV new a couple of years ago and the dealer is sending us ads to trade or CRV on a new Honda. They would prefer we lease.

    I think it is a matter of time till Fiat-Chrysler is acquired by a competitor. In the near future it would not surprise me if we got down to only one domestically based auto manufacturer.

    • 0 avatar
      Scoutdude

      No auto manufacture wanted Chyrsler Daimler tried to sell them for several years before they found someone stupid enough to take the mess of their hands. Once it became the US government’s problem they had to pay Fiat to take the mess, not sell it to them pay them to take it.

      GM paid something like $2 billion to not be forced to merge with Fiat because of a stupid contract they got into.

      So no, FCA will not merge with nor be acquired by anyone, they will go down in flames and some portions of them will be picked up out of bankruptcy liquidation.

  • avatar
    Lorenzo

    Sergio should forget merging with another car company – they know too much about the industry. He should be looking at a rich company like Microsoft or Google, run by people who wouldn’t know what they’re getting into.

  • avatar
    Jeff S

    Sergio can call it a merger to save face but Fiat-Chrysler is a better candidate for a take over. Fiat-Chrysler needs to do some brand pairing and get rid of Alfa-Romeo, Lancia, and most of their other European brands but keep Fiat. Eventually Fiat-Chrysler should eliminate either the Chrysler or Dodge brand but keep Jeep and Ram. If Fiat-Chrysler is serious about merging they need to do some brand pairing. Fiat-Chrysler needs to focus more resources into Fiat,Jeep,and Ram.

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