By on April 14, 2016

Tango dancing

Fiat Chrysler Automobiles chairman John Elkann, like the company’s sweatered CEO, is making come-hither eyes in the hopes of luring a suitor.

FCA needs a partner to turn its lofty debt pile into capital, so Elkann wants other automakers to know just how thrilled he’d be if they helped FCA save $10 billion a year, he told shareholders of the investment company controlling FCA (via Bloomberg).

The problem, he lamented, is that other automakers are all wrapped up in trying to develop autonomous technology, often with outsider help. Like a wallflower with a heart of gold, FCA feels ignored despite having a lot to offer.

“You need two to tango, and most of our competitors are busy with the great opportunities that technological disruption has to offer,” Elkann wrote to the Exor S.p.A. shareholders.

What’s an Italian-American automaker to do?

Autonomous vehicles are sexy and alluring, but they’re not going to make up more than a niche market for years to come, Elkann insisted. Human-driven cars are where the money is today, so why not hop on board and flex some revenue-generating muscle (while eliminating a 5 billion euro debt in the process)?

“Boring old carmakers need to figure out how to make this profitable and guard against falling into the 1990 trap of ignoring that business while chasing profits in other parts of the value chain,” Elkann said.

Last year, CEO Sergio Marchionne flung all sorts of woo at General Motors in a bid to be taken over by a larger partner, but all of his advances were rebuffed. GM CEO Mary Barra told Marchionne that her company wanted its space and wasn’t interested in playing the field.

It’s unlikely that browbeating your competitors will compel them to merge with you, but Elkann, with Marchionne as his wingman, are going to keep trying until the company finally sees some action.

[Image: Suzana Gudolle Dias de Bam/Flickr (CC BY 2.0)]

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63 Comments on “Come Dance With Me: Fiat-Chrysler Makes Another Pitch for a Partner...”


  • avatar
    CoreyDL

    “Boring old carmakers need to figure out how to make this profitable and guard against falling into the 1990 trap of ignoring that business while chasing profits in other parts of the value chain,”

    Yeah, all that stupid aero styling Taurus, and Lexus and Infiniti activity was just stupid.

    What’s he talking about? Maybe I misinterpreted.

    • 0 avatar
      BuzzDog

      Difficult to say for certain, but a guess is that he is referring to the time when automakers were investing in other, niche automakers (GM in Saab, Ford in Jaguar, Range Rover and Volvo), rather than using the funds to develop new and better products.

  • avatar
    sportyaccordy

    “It’s unlikely that browbeating your competitors will compel them to merge with you,”

    CLEARLY Steph Williams is not well versed in the art of the PUA. Neg her to make her emotionally vulnerable, … , seal the deal, PROFIT.

    • 0 avatar
      28-Cars-Later

      The D.E.N.N.I.S. system works so much better.

      • 0 avatar
        Lou_BC

        D- Demonstrate Value
        E- Engage Physically
        N- Nurture Dependence
        N- Neglect Emotionally
        I- Inspire Hope
        S- Separate Entirely

        That already sounds like FCA’s small vehicle business plan.

        Oh and is that picture another Dancing With Stars Boner?

    • 0 avatar
      Kyree S. Williams

      If it were BMW or somebody, maybe that would work. That’s what you do when you’re successful. But it’s Chrysler. Excuse me: Fiat Chrysler. The fact is, FCA has been unsuccessful in many mainstream markets, which is why the company sees the need to jump into bed with someone else. FCA comes not from a position of power, but of weakness and humility.

      But “negging?” That’s like a 30-something balding middle-manager telling Kate Upton that her breasts are lopsided and that she should do something about them. A suitable response to being negged by FCA is “Dodge Dart.”

  • avatar
    SCE to AUX

    Soon, FCA is going to be served with a restraining order.

  • avatar
    Richard Chen

    http://i.imgur.com/6xNmySV.gif

  • avatar

    While everyone else chases self-driving cars and EV and other pie-in-the-sky, MOPAR should keep building big, traditional muscle cars with RIDICULOUSLY POWERFUL ENGINES and figure out ways to make the product better and less expensive.

    Eventually the roads will be silent except for the roars of 800HP Supercharged v8’s

    Focus on profiting from new sheet metal on cost-effective, proven-platforms.

    • 0 avatar
      Eyeflyistheeye

      And how much FCA stock are you planning to buy?

    • 0 avatar
      01 Deville

      HAHAHA. Good one!

      “and figure out ways to make the product better and less expensive.”

      Now I know what was wrong with that company. Thanks for showing them the light, as I am sure they were the exception in business and doing opposite of what you suggested.

      Now I would nominate you for CEO of FCA, but I would rather have you come from backdoor as Repulican Nominee in the contested convention with Trump as your running mate. Im sure it will yuuuge.

      • 0 avatar
        Lou_BC

        “and figure out ways to make the product better and less expensive.”

        Isn’t that why FCA wants to merge or find a partner?

        They have “figured out” that they can’t do it themselves.

    • 0 avatar
      sportyaccordy

      This has worked really well for the 300, which is down to about 1/3 its peak sales volume

      When gas hits $4/gallon again, FCA will be running to their govt for more bailouts.

      To paraphrase you,

      “Nobody cares about RIDICULOUSLY POWERFUL ENGINES when gas is FOUR DOLLARS A GALLON and most of your driving is done SITTING IN TRAFFIC!”

    • 0 avatar
      Loser

      I can’t figure out if BTS is serious or just playing a character.

      • 0 avatar
        Xeranar

        At some point he became the living embodiment of every Trump voter and evaporated into the atmosphere….

      • 0 avatar
        sportyaccordy

        You’re not alone- he can’t either.

      • 0 avatar
        ajla

        BigTruckSeries has commented here for years (his original screen name was “Flashpoint” but a technical glitch made him get a new one) and although he’s always had some bravado he didn’t morph into this current iteration until his YouTube channel started getting enough hits to earn him some cash.

        He has actually admitted a few times in the recent past that he plays something of a character because “more attention = more money”.

        If you watch his videos, he occasionally tries to rant in a way that matches his written comments but it comes off very forced becuase he isn’t a great actor and I honestly think he’s just a mostly normal guy in New York with internet fame and big momey ambitions.

        If his comments bother people on here, the best thing to do is ignore them because he feeds on people’s attention.

  • avatar
    Eyeflyistheeye

    The problem for FCA is that if another carmaker wants Ram & Jeep, the only two profitable brands, they can just wait for them to go belly-up and snatch them at a bargain price. Not to mention that they won’t have to deal with the insufferable and overrated Sergio thinking he’s still in charge even though any first-world carmaker who partners with them would be doing him an enormous favor.

    Damn it Sergio, you could have used the money to buy Mazda and have a modern platform along with modern four-cylinder engines, but no, you had to plow it into Alfa Romeo, which is something that should have been done after the core brands of FIAT and Chrysler were finally back on their feet. The World Engine is a piece of junk, and the FIRE engine debuted in 1985 like I did. How can any major automaker not have a good four-cylinder and possible three-cylinder to carry their mainstream lineup?

    Also, FCA’s passenger cars are laggards in their segments. Why would even a C-student want to partner with the F-student? The Dodge Dart was supposed to be European handling mixed with American badassery that ended up as third-world styling built with 1980’s-era UAW quality. The Chrysler 200 was an admitted knockoff of the Fusion that ended up one generation behind. The only thing they have going for them is the Hellcat, which is basically a desperation move since the single move they could have done to increase sales is drop big engines into their cars since they have no immediate hybrid powertrains aside from the upcoming Pacifica. I mean, it’s good somebody is doing it, but it’s not a long-term business strategy,

    • 0 avatar
      SC5door

      They has said they copied the roof line of the Sonata; there’s no mention of the Fusion.

      • 0 avatar
        Eyeflyistheeye

        http://www.motortrend.com/news/we-hear-chrysler-benchmarked-the-ford-fusion-for-2015-200-sedan/

        “We went head to head and decided that we were going to beat the Fusion on day one,” Al Gardner, Chrysler brand president, told The Detroit News. “We’re actually beating Ford at their own game, and I will tell you they are great.”

        • 0 avatar
          SC5door

          Evaluating by comparison is not “knocking off” something.

          Here’s where they actually “copied” something:

          http://www.autoblog.com/2016/01/25/marchionne-chrysler-200-design-dummies-report/

      • 0 avatar
        Kyree S. Williams

        I actually like the 200; it just needs to be about half a size longer. It’s kind of cramped, especially for such a sweeping roofline.

      • 0 avatar
        MRF 95 T-Bird

        It seems like Chrysler has been trying to cobble together a competitive mid-sizer for years. Interesting that you mention the Sonata. Back in the late 80’s I remember reading that Iacocca was considering a rebadged Sonata; this would be the 2nd generation Mitsubishi based version that was made in Quebec as a mid-sized model with a Eagle badge. Could it have been worse than a Renault Medallion?

    • 0 avatar
      sportyaccordy

      I won’t speak on the Dart, but the 200 is competitive. I would put the 200 ahead of the Altima, Legacy and Passat. It’s in no way a bad car and IMO is the best looking car in the segment. If it were made by anybody else it would get its just due, but FCA mainstream cars are cursed by the name

      That said, FCA does have some uphill battles to fight. The FIRE engine is kind of a disgrace, and is one of many nails in the coffin time is building for Fiat. The Compact Wide platform is insanely heavy. The Cherokee is like 300-500lb heavier than the competition. When gas goes back up the fuel economy penalty from that weight will send people fleeing. They are in a bad way.

      • 0 avatar
        Slawek

        Cherokee is heavier than competition because it has extra noise insulation competition doesn’t have.
        That’s also why Buick Encore is 600 pounds heavier than Chevrolet Trax. The same with Lexus ES350 and Camry and so on.

        • 0 avatar
          derekson

          No, it’s heavy because the Fiat platform it’s based on is about a decade old and it’s heavier than the architectures competing manufacturers are using now. This is the same reason its distant relatives, 200 and Dart, are also porky.

          • 0 avatar
            Slawek

            Lexus NX has the same length and width. It is also well insulated and heavy.
            What is that competition that is not as heavy?

        • 0 avatar
          sportyaccordy

          The ES350 is based on the Avalon, and depending on the trim of the Avalon is slightly heavier or lighter or heavier (+/-70lbs). The Encore is also only ~100-200lb heavier than a comparable Trax. Both are a far cry from the 300-500lbs the Cherokee has on its competition. I have worked with insulation for car audio. It can be heavy, but not 300-500lbs heavy.

          Cherokee is heavier than the competition because FCA doesn’t know how to design a light, modern chassis. The LX is ancient and heavy, but it gets away with it because Mrrrca and also because Hellcat. Pretty much the same story with RAM and the JGC. But both of the other mainstream manufacturers have made compact cars and midsizers of average weight. FCA still struggles.

      • 0 avatar
        JohnTaurus_3.0_AX4N

        I also like the 200, but now that Ford is about to once again put a 6 under the Fusion’s hood (in Sport trim), itll probably win out in my personal ranking of midsizers. I want a V-6 in my Fusion and 200, but an I-4/6MT in my Accord (coupe).

        I think the 200 deserves so much more than to be lumped in with the terrible cars that came before it. But, evidently the market has spoken, and the verdict is that the 200 is too cursed by history to be taken seriously. Its a real shame that people are too busy buying the lackluster Altima instead of giving the 200 a chance. If I were Sergio, Id double down on the 200, dump the crappy I-4 it has for a base engine and source Honda’s excellent I-4 from Accord in its place.
        The Pentastar stands well, its just the third-rate I-4 that needs to be sent to the big crusher in the sky. A coupe version couldnt hurt, its a damn good looking car and I think it lends itself to a coupe bodystyle.

        • 0 avatar
          DeadWeight

          Anything with a blue oval badge, good, mediocre, or even horrendous makes you achieve a full blown erection and cream in your pants.

          There’s no bigger irrational fanboy of any brand of anything than you that I’ve been exposed to on the interwebz in all my life.

  • avatar
    readallover

    This seems simple to me: Sergio gets FCA`s diesel division VM Motori to come up with a solution to VW`s diesel problem, then he blackmails Volkswagen into a merger. See I told you it would be easy.

  • avatar
    seth1065

    I am sure VW would love Ram and Jeep but not much else in the FCA stable. Just wait it out and FCA will be at the Pawn store when they need cash or when gas goes up.

  • avatar
    Conslaw

    Sergio should rethink his pitch. You can’t just call up Mary Barra in the middle of the night and say “ARE YOU THE KEYMASTER?”

  • avatar
    laserwizard

    I have a suggestion – sell Jeep and close everything else. All told we are still left with about $3 billion plus perpetual interest on the saving Chrysler deal even after the money that Fiat paid for it. It is evident that Chrysler and Fiat are worthless and the only thing that is worth saving is Jeep. Ram could be sold off to some other company but that will only make it a third rate truck – a shame since it and Ford right now are the only 1st rate companies and there are no second rate companies. The rest are just pretenders.

  • avatar

    Dead Brand Walking. Worst Bailout decision EVER was gifting Chrysler to Fiat.

    • 0 avatar
      sportyaccordy

      Sergio was weeks away from tossing pizzas at a tourist trap restaurant in Venice. God smiled on him with that deal.

    • 0 avatar
      VoGo

      We’ll wait here while you propose a better alternative.

      • 0 avatar

        A better alternative than giving it away to Fiat?

        Letting it bankrupt completely.
        Letting the federal and Canadian government assume complete ownership
        Spinning off RAM and Jeep to survive.

        Please tell me what Fiat’s indebtedness, its ineptitude at launching a car, its poor image among the general car buying public, and Sergio’s so-blustery-its-almost-parody leadership style bring to Chrysler’s table?

        • 0 avatar
          JustPassinThru

          Absolutely.

          Following Bankruptcy law and procedure, would have ensured that shareholder and bond holders got the fairest settlement possible. Sale of the physical plant and intellectual properties, as a unit or in pieces, would have protected the value of those items and ensured that the purchasing company had a stake, and was solvent and with access to capital.

          Even if the whole of Chrysler were unpurchased and locked up and sold as parts and land…it would have been better. People wouldn’t quit buying cars; and the other automakers would pick up the market share. The only people really, truly, permanently out of work would be the ones who let the company slide so deep and their lieutenants.

          As it is, it was gifted to Fiat with the promise that vaporware and shell-game bookkeeping would let the resultant company prosper and be a world presence. Of course those optimistic scenarios regarding world economies were…optimistic.

          Now the bill is due; and an undercapitalized company with mediocre-and-worse product is reeling from the costs it DIDN’T face when it was assembled like Topsy.

      • 0 avatar
        sportyaccordy

        As others said, let it fail. This idea that car companies are too big to fail will only make their inevitable failures that much more painful. What do you think is going to happen to FCA when gas goes back up and SUV/truck sales plummet?

    • 0 avatar
      Eyeflyistheeye

      If there’s one thing where Barack Obama and Bob Menendez deserve credit for, it’s not forcing GM to acquire Chrysler which is what McCain was leaning towards along with the Bush administration if the crisis would have happened earlier. That would have taken GM down as well.

  • avatar
    SC5door

    And here’s Hyundai’s chance to get into the truck business by purchasing the RAM lineup—with an some serious crash worthiness upgrades of course.

    The new H350 covers the vans (which Hyundai doesn’t sell here…yet)—as the ProMaster is awful—3.3TT, 3.3 NA and a 2.5L diesel could cover the engine range on the H350.

    Santa Cruz covers the midsize category.

    RAM 1-2-3500 covers everything else.

  • avatar
    seanx37

    I have some questions.

    First, exactly how much debt is FCA in? I have just looked it up, and saw wildly different amounts. One said $40 billion. If that is the case, isn’t FCA doomed no matter what?

    Two, why haven’t the shareholders demanded Sergio’s head yet? Spending that much money on Alfa instead of designing a modern V8 for Ram, or a new Grand Cherokee seems to be not just incompetent, but criminal negligence.

    Three, what does anyone think happens next?

    • 0 avatar
      Lorenzo

      I was the one who said $40 billion, but that was awhile ago, and I meant mostly long term debt. Sergio has been whittling it down, but the total debt load is immense for the industry, maybe exceeding the debt level of Ford when they mortgaged everything under Mulally. Try yahoo finance for one view of the balance sheet (there are other reconstructions of the finances):

      https://finance.yahoo.com/q/bs?s=FCA.MI

  • avatar
    Geekcarlover

    Stop dreaming of the West young man. Look East, think Tata.

  • avatar
    islander800

    You know what partnership arrangement might make sense for Sergio?

    Team up with PSA, the Peugeot/Citroen company, just fresh from an investment guarantee from the French government, and who have stated an intent to re-enter the North American market within the next few years. Their range of vehicles is, in many respects, a refreshing take on the 21st century auto we haven’t seen from the same old same old, and every bit as good as anything from Asia, America, or….Germany.

    Wait for it.

    • 0 avatar
      highdesertcat

      islander800, I’m sure that posibility has been considered. But, as you may recall, willing partners for Fiat were hard to find even before the death of GM and Chrysler in 2009.

      What made the acquisition of Chrysler so attractive to Sergio was the $1.3B bribe to take Chrysler’s carcass off our hands, and the fact that Sergio stood to inherit all that wonderful Daimler R&D that produced the 300, Grand Cherokee and new, improved, better than ever, RAM.

      Is there anyone on the planet that would be willing to partner with Sergio/Fiatsler today? And that’s the question, isn’t it?

      • 0 avatar
        PrincipalDan

        This goes back to the argument that GM and Chrysler should have been merged during the bankruptcy. Keep Jeep and the LX platform, keep HEMI (for passenger car use at least) and Cummins truck engines, keep the minivans, combine engineering staff to continue to refine platforms, transmissions, and engines.

        • 0 avatar
          Jeff S

          If Chrysler merged with GM it would have been the end of GM and Chrysler would still be in the situation they are in today.

          Mahindra might be interested in Fiat Chrysler.


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