The leader of Fiat and Chrysler has made his penchant for auto industry consolidation well-known, but he’s made it clearer than ever the best matchup is with him and General Motors.
In a wide-ranging set of interviews published Monday by Automotive News, FCA CEO Sergio Marchionne says he’s studied the merits of an FCA merger with GM and they’re too good to pass up. Through this year, Marchionne has made it public FCA is looking for partners interested in everything, from individual projects to a full-blown merger, getting approval from Fiat’s controlling family.
Part of this stems from the issue the combined FCA still is not producing enough cars globally to turn a profit. In fact, Marchionne told Automotive News that FCA can survive on its own, “in mediocrity.” The car lineup still struggles, and the company has basically staked its future in Jeep and the enormous investment in the Alfa Romeo revival. Put simply, there isn’t enough cash in the coffers to develop all of the cars the company needs in a competitive way.
And in GM, Marchionne sees the tools that complement FCA and could make one strong automaker. GM’s CEO Mary Barra doesn’t see it the same way, and says GM is still merging with itself. Given how much more cash GM has in comparison to FCA, though, it’s hard to ignore outward appearances that make it look like one bailing out the other.
Barra won’t take Marchionne’s phone calls, he said, so the 63-year-old executive – who already merged Fiat in Chrysler in 2009 with the help of government backing – is putting increasing pressure on the largest American automaker to look at a deal. Although, Marchionne won’t call it pressure, or even “hostile.”
“There are varying degrees of hugs. I can hug you nicely, I can hug you tightly, I can hug you like a bear, I can really hug you. Everything starts with physical contact. Then it can degrade, but it starts with physical contact.”
Marchionne isn’t buying Barra’s excuses for not contacting him, either.
“This is not a question of telling me to screw off. I understand [GM’s] desire to be alone and execute [its] plan. I’ve listened to the comments … ‘we’re still merging with ourselves,’ which I do not buy for a company that is 107 years old. You can’t merge with yourself.”
Whether or not you believe Marchionne’s claims about the benefits to the companies, it’s hard to see how a combined GM-FCA benefits consumers, likely with an enormous and confusing array of brands, products and dealers that will be whittled down slowly.
While the Chrysler Group revival has certainly had some strengths since the dark Cerberus days in 2009, it’s had plenty of shortcomings, and the next wave of products like the Chrysler Town & Country, Jeep Wrangler and Dodge Charger have a lot riding on them. And the ability for Alfa Romeo to go from 60,000 units to 400,000 globally is also key to getting some cash.
And if these product pushes fall short, a full-blown merger or sale may not just be an “option” for FCA.