Marchionne Drops Plans For The GM Merger
Sergio Marchionne, the CEO of Fiat Chrysler Automobiles, says he doesn’t have any plans to push for a merger with General Motors. The FCA boss proposed the idea to G.M.’s CEO Mary Barra in an email several months ago, but was roundly rejected.
Speaking to the New York Times at a ceremony preceding labor contract talks with the United Automobile Workers union, Marchionne was quoted as saying, "I was rebuffed once, and I won’t go back to get my nose bloodied a second time.”
The statement contradicts previous comments made by FCA chairman John Elkann, who told the Wall Street Journal earlier this month that he was still interested in creating a partnership with G.M.
Marchionne has been particularly vocal in urging automakers to consolidate as a means towards greater efficiency and higher profits. And while joining up with G.M. appears to be off the table, FCA’s CEO is undeterred in pushing for future mergers, saying that there is a better way to do business. "I’ll wait, and we’ll get it done,” he added.
Marchionne was a driving force behind the Fiat-Chrysler merger that created the modern auto behemoth. FCA is currently the seventh-largest automaker in the world, and owns a number of big-name brands, including Alfa Romeo, Dodge, Ferrari, Jeep, Lancia, Maserati, Ram Trucks, Abarth, Mopar and SRT.
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Why it matters
What a bummer for Sergio Marchionne. The man is largely responsible for saving both Fiat and Chrysler with last year’s merger, but folks don’t think about that when they read headlines like the above. Instead, most people see Marchionne’s push for consolidation to be a sign of weakness rather than an intelligent business decision.
From Marchionne’s point of view, the merger option isn’t just preferable, but a necessary step in the current auto climate.
For example, when The Times first broke the news about the emailed merger proposal, Barra joked that she never received it and that it probably ended up in the spam folder. FCA’s stock value promptly saw a 10-percent dip over the course of two days.
That’s pretty rough, because even though last year’s creation of FCA did indeed bring both Chrysler and Fiat back from the brink of disaster, the company isn’t exactly out of the woods just yet. It was recently revealed that the automaker would be forced to delay the redesign and release of at least 12 current or new vehicles in North America. The reason for the delay is speculated to be Marchionne’s search for a new industry partner. Meanwhile, the company’s cash and marketable securities are tumbling and its debt is rising.
From Marchionne’s point of view, the merger option isn’t just preferable, but a necessary step in the current auto climate. In his mind, overlapping vehicle designs and parts creates “immoral” levels of waste. As far as FCA’s operations go, that’s probably true. But if a rival like G.M. is doing just fine on its own, it looks like FCA is simply out of luck.
Hopefully, the company will figure out how to stay afloat without clinging to outside support. Recently, we’ve seen several exciting offerings coming from the conglomerate, most notably the new 2016 Alfa Romeo Giulia QV, a sporty sedan simply dripping with Italian flair. Under the hood is a Ferrari-derived V-6 engine, while the exterior is chiseled in classic lines and proportions, a winning combination in my book. It’s a car based on selling soul and character, which sounds about right coming from an underdog.
Hopefully it’ll move enough units to keep FCA satisfied without yet another marque added to its name.
Source: Automotive News