By on March 8, 2017

marchionne

It’s often sad to witness the moment when an individual’s high hopes collide with a cold, antiseptic wall of reality. Though we should all aspire for more, the inescapable truth is that most of our dreams will end up dashed on the rocks.

This week it was Fiat Chrysler Automobiles CEO Sergio Marchionne’s turn — once again — to face rejection. Buoyed by PSA Group’s acquisition of General Motors’ European car divisions, Marchionne must have assumed that love was in the air and it would perhaps soon be FCA’s turn to go home with another automaker.

Unfortunately for Marchionne, one potential mate quickly burst that balloon in a fairly heartbreaking fashion.

Under Marchionne’s leadership, FCA has attempted to cozy up to General Motors before. GM, however, has always spurned those advances. Always the persistent one, Marchionne took advantage of his Geneva Motor Show appearance yesterday to let his domestic rival know FCA was waiting, and available.

“I never close any doors. I may shamelessly try and knock again … on the GM door or any door if I thought it was a good thing for the business. Absolutely, without even blinking,” Marchionne told reporters. “The desirability of GM as a potential merger candidate remains untouched.”

GM unloaded Opel and Vauxhall to strengthen its profitability, leaving many to wonder how a debt-laden FCA could make a merger seem at all attractive, despite the other automaker’s strong European presence. The General, no stranger to Marchionne’s boombox serenades, hasn’t taken up that offer.

It was Volkswagen, however, that delivered a thrust right through the heart.

In another moment of boundless optimism, Marchionne explained to Geneva journalists yesterday that Volkswagen Group’s new PSA-Opel threat could send that company on the prowl for a partner. When it does, FCA would be there with open arms.

“I have no doubt that at the relevant time VW may show up and have a chat,” Marchionne said.

After hearing this, Volkswagen CEO Matthias Müller slapped down the possibility with a not unexpected level of German curtness.

“We are not ready for talks about anything,” Müller told Reuters on the show’s sidelines, possibly while looking over his shoulder for an approaching sweater. “I haven’t seen Marchionne for months,” he added.

Not willing to leave it there, Müller dialed up the venom and made his company’s feelings crystal clear.

“We have other problems,” he said.

[Sources: Reuters, Bloomberg]

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22 Comments on “Sergio’s Urge to Merge Falls Flat, Leads to Dinner for One...”


  • avatar
    dividebytube

    VW + FCA – Why what could possibly go wrong with that unholy meeting?

  • avatar
    indi500fan

    She’s like the girl that’s friendly, decent looking, but has ginormous student loans for a major that got her a barista job and big credit card balances…marry at your own financial risk…

  • avatar
    FreedMike

    Anyone recall the lyrics to “China Girl”?

  • avatar
    MLS

    Can TTAC try to cut back on the overly cute writing? It grates.

  • avatar
    SCE to AUX

    “spurred those advances” should be “spurned those advances”

    “‘We have other problems,’ he said.” That’s uncharacteristically frank on Mr Müller’s part.

  • avatar
    PrincipalDan

    “Sergio – table for one.”

    “No – two. I’m waiting for someone. She’ll be here any moment.”

  • avatar
    Vulpine

    The article assumes Sergio was asking for a buyout rather than offering to buy VWG.

    Not saying he was offering to buy VWG but I get sick of seeing assumptions made on too little data. Clearly VWG needs help; they’re sliding down the market scale while FCA is on the rise.

  • avatar
    Big Al from Oz

    What’s happening at FCA?

    1. A noticeable decline in Sergio’s desires in the direction he wants FCA to head in.

    Why? A realisation by Sergio that FCA is a lot more restricted in options.

    2. A decline in ideas and delays in rolling out new models. Look at Ram and Jeep delays.

    What’s occurred? FCA has relied on existing tech and design from Chrysler’s links to Damlier. A lack of innovation has occurred since Fiat became involved.

    3. What of the Italian brands?

    Again, a fail by FCA to improve the global position of the Italian brands enough to cover their drain on the business.

    4. Money not invested wisely into product development. Alfa and the rest of the Italian brands sucked what little money FCA had for product development.

    5. What has caused FCA’s current position to be dire?

    a. A lack of focus on products and brands that would of given FCA cash. As poor as Chrysler’s brands are these brands should of been thefocus of FCA. Sergio did direct some focus on Chrysler but wasted limited resouces on Italy.

    B. Sergio is totally accountable for FCA’s cuurent position. Sergio’s iniial belief that FCA was in a position to dictate to companies like GM were totally false.

    FCA is in an unrecoverable downward spiral. The individual who can be held most accountable is Sergio the dictator.

  • avatar
    Tstag

    FCA could always try to merge with PSA.

    • 0 avatar
      RobertRyan

      @Tstag
      Where is the Chinese when you need them?

    • 0 avatar
      SCE to AUX

      Then they could be (F)ASPCA, and take donations on late-night TV.

    • 0 avatar
      Big Al from Oz

      Tstag,
      If there ever was a takeover of FCA (a merger would not occur) by PSA you would see a dismantaling of FCAs European side of the business.

      The US operations would be rationalised. Many FCA workers would become unemployed.

      • 0 avatar
        Lorenzo

        FCA’s market capitalization is about $18 billion. Its bonded debt is $40 billion. Much of the Fiat industrial conglomerate was spun off into separate companies, with Fiat stockholders getting stock in the new companies, and the debt remaining with the core business, autos. You just saw the same thing with Ferrari, which took no part of the parent company’s debt with them, while the Agnelli family took 37% of Ferrari, the same percentage of its FCA ownership.

        Without a merger or buyout, the same process will be repeated with Alfa, Maserati, Ram, Chrysler minivans, and jeep, leaving the original Fiat Europe/Brazil holding the debt and being liquidated with huge losses to the bondholders.

        Fiat’s founding Agnelli company will get their money, but with a huge black eye, especially in Italy, for the failure of Fiat happening on their watch. That’s why they hired Sergio, to dump the high cost, low margin auto business on somebody else, instead of parting out the company.

  • avatar
    DeadWeight

    “Not willing to leave it there, Müller dialed up the venom and made his company’s feelings crystal clear.

    ~ “We have other problems,” he said.’

    I google translated this to German & back to English again.

    “We have other PROBLEMS…” apparently means “[G]o and f*ck yourself and your delusions, Sergio!”

  • avatar
    FreedMike

    Seriously…FCA is ripe for the picking by some Chinese company who wants entry into the U.S. market.

  • avatar
    seth1065

    Lets face it they will be bought if only for Jeep , there may not be much left after the buyer picks the scraps of todays FCA but some how the sweater will get out of this.

    • 0 avatar
      DeadWeight

      It’s rumored that Sweater Bag Man nets a cool 100 million a year as an errand boy of the Agnelli family.

      The Ferrari offloading gave him some breathing room, for now, but he’d better figure a way out of the FCA debt-grip or he may be sleeping wid da fishes, not for nothin’, soon.

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