Talk about a turning of the tides. It was reported previously Fiat-Chrysler Autos would be simmering down their calls for industry merger, and revisit the idea in a few years. Mainly, General Motors has been the target of such calls from FCA CEO, Sergio Marchionne.
Such patience has been short lived.
The latest report from Automotive News puts Marchionne on the record during a two-hour interview where he was nearly explosive about making a deal with GM.
His tone released an air of hostile takeover into the room, with Marchionne explaining his degrees of compromise saying the following:
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.
GM’s blunt response? “Why,” asked a ranking GM official, “should [GM] bail out FCA?”
Marchionne is adamant a merger would create the best deal for both company’s shareholders, with the FCA Chairman stating he has gone through each vehicle, brand and plant to analyze the operation.
“I’ve obviously made some arbitrary assumptions about which architectures survive, which engines survive, and the only deal that offers them the same benefits as we potentially get … is us,” said Marchionne.
He also didn’t hide the fact he has reached out to General Motors numerous times, and offered to sit down with GM CEO Mary Barra to discuss the possible numbers. GM says it’s busy “merging with itself.”
Marchionne’s adamant tone continued stating, “You may reject the deal but you can’t reject the discussion. If you’re refusing to talk to me, and you have seen nothing, you either think you’re above it all, or you think the capital markets are full of schmucks that owe you something.”
Things sound like they’re getting a bit dicey inside FCA.
Comments
For one thing I really wish Barra, Annman or even Chairman Solso would start speaking up more. This Sergio punk seems to be bullying mode now. GM management needs to step up its fighting tone and let the world and shareholders know that they don’t want this and its a bad idea. Not just some prepared statement, a actuel high end exec, I don’t know say maybe the CEO out in front of the public shooting this fools notions down. I like Barra to a point but she seems too timid and behind the sceans. Give me Akerman back, he would tell Sergio off quick.
Throw Bob Lutz out front with middle fingers in the air telling Sergio to go to hell.
If Lutz were still around he’d have challenged Sergio to a boxing match and this would be over by now.
There is too much FCA debt for a merger to work. It would also be a endless maze of damaged brands all in transition.
GM is doing a good job with Chevy, Opel, and Buick and their respective turnarounds. The General doesn’t need any distraction right now.
The old Chrysler has great potential now as a organization of sub brands. Sergio, unfortunately, isn’t investing enough, especially in the Chrysler brand which, along with Jeep, could have great global potential.
FCA should simply sell Alfa, further shrink Fiat, and look for an Asian partner.
GM doesn’t need the distraction or debt. There are better ways to compete with VW, Toyota, and Renault-Nissan.
Haven’t I read that they have deferred some product programs? Not sure if this was done because they don’t have the cash or just done to bolster the books in the short term to maximize the value of the company and try to sell/merge it. It appears that Fiat wants to maximize it’s return but really isn’t interested or capable of running the company for the long term.
They gotta be hurting in terms of CAFE — anyone got numbers?
good comments.
Marchionne will be the person that forces me to a Ford F-150 or a Toyota Tundra. My neighbours brand new Tundra in our shared driveway sure looks nice. Maybe if Fiat-Chrysler had some semblance of quality, not to mention the local Chrysler dealer, who is why my neighbour no longer has a Ram 1500.
Because he can’t keep FCA above water he wants to ruin more brands? If anything ever happens to John Elkann then FCA will come apart at the seams. The only reason they’re spinning off Ferrari is so they can try to get rid of $3 billion in debt.
I wish Marchionne would shut up already. GM wants none of his bullshit.
A while back I gave FCA about 10 years and with the reports that continue to come from them and his plea’s for help give me a feeling I may have over estimated the time?
Sergio is like Captain Smith of the Titanic. He has a great ship with some of the Chrysler products but yet places all the profits back to Alfa and Fiat. These two brands will be the death of Chrysler unless he starts to put the Jeep profits and Ram Profits back into Chrysler cars not Alfa.
He has 3 more years to increase Alfa sales to 400,000 units and FCA up about 2.5 Million units but he will not do it with out Chrysler cars.
All his Chrysler cars have been delayed and will not save his butt buy 2018 nor will he see 400,000K Alfas by 2018.
To acknowledge Sergio in public is a double edged sword. While it is cool to see someone like him get smacked down it is not cool to give him any public credibility on a topic that should never have gone public.
The fact is he has been give a smack down in private as GM should do and that is why he is so fired up. GM has been dealing with this and dealing with it in the right way. Running your mouth in the press is not how you deal with cooperate idiots like this. He has little money, he has too little volume, he will miss his own set unit goals and he is desperate as he will be remembered as the man who may kill two large merged companies.
Sergio is in trouble as no one even those he though would back him will not back him. This is going to get ugly and lets hope that the board at FCA steps in and tosses him and his sweater out before he kills the entire company.
In the end Ferrari will survive as would Jeep and Ram but all bets are off on the rest of FCA.
If I were GM I would tell him give us Jeep and we will supply you with a shared platform but no merger what so ever. He would never take it but GM could do well with Jeep/GMC dealers.
Hell Give Sergio a deal Like GM has with Ford to share development. You give us money and we will build you a tranny that we both use but you own no part of us and we own no stake in you. It would have to be a cash deal as FCA has nothing to offer that is of any value to GM that they already do not have.
Maserati would survive because Ferrari uses it for volume with their front engine cars.
Maybe but maybe not. Ferrari us spun off and if FCA fails odds are Maserati would be sold off.
I understand what your saying Scott about GM doing stuff to fight them in private. But my way of thinking is that this is still in a stage where no more then finance and auto industry gurus are looking at it. If you start making this more mainstream and if GM would show its hand more in public that there are 1000 reasons why this is a bad idea, I would think FCA would start suffering at a sales point. Who wants to buy a car from a company that shows its in bad shape and is trying to merge with someone else. Sure it would not stop everyone from buying a FCA product but it would probley put a dent in it. Then FCA would be in more trouble and have even more of a issue trying to force their hand on GM. The bottom line is there are many anti-trust issues that the government would put a stop to this at the start, even if GM was willing to merge. The fact that they are going to fight it will be a dagger through the heart of Mr. Sergio.
Answer not a fool according to his folly,
lest you be like him yourself.
Answer a fool according to his folly,
lest he be wise in his own eyes.
Dan this verse takes some thought but it delivers much wisdom. While it sounds counter to each line it really points out there is a time to remain silent and then there is a time to speak out.
Right now Sergio is a fool and he is grand standing for attention. He has few people fooled even most out side the auto industry. Right now let him talk as his words will come back to haunt him. He is gaining no ground.
If GM were to answer him it would lead to a war of words that would only complicate things even more and draw more attention to this than GM wants or needs.
Case in point. Say a woman has a vial man outside her house singing loud to get her attention. Is it better for her to open the window and give him the attention he craves and make a spectacle of it for all the neighbors to see and hear?
Or is it better for her to keep the lights off and just send the dogs out to bite his ass?
GM is going about this the right way. They hold the high ground and are not in any peril here as he has no real support here and is just crying for attention. The last thing you do is give him what he wants attention.
I give credit to Mary and those in charge at GM not to do the reactionary thing and reply. They gave him his answer last spring and laid up lawyers and bankers to show they are not going to just let him do as he pleases.
The truth is GM has more going for it than he has for FCA. If it came to a battle they both would be bloodied but Sergio would go down with his ship.
The truth is like I have said his goals for the future are unrealistic and he has lots of plans but no money to pull it off. He has too little volume and just no support what so ever.
I have preached this against him for the last year and there is a very good story from Peter Deloenzo that out lines what I have learned and seen over the last year well. I age with many of the Wall ST analyst that FCA could fail in 10 years as they are going. GM is not growing weaker but stronger every quarter. The investment firms are standing behind them not FCA.
As for the UAW they will side with GM as Sergio is too irrational and FCA is too weak with UAW plants and work. Keep in mind this is the man who will move Jeep from Toledo. It has not happened yet but things are not looking good.
I will post the link and more need to read the truth of Sergio and understand why GM is using wisdom at this point not rants that are meaningless and only will hurt GM in the long run at this point.
There is a time to remain silent and there is a time to answer and right now two fools ranting are not beneficial to GM. I know it is hard to watch them remain silent but it is the wise thing to do right now. Now if it ever does progress there is a time to respond but we have not gotten to that point yet.
The last thing we need to do is put the spot light on Sergio.
If that goes through at least Jeep and Ram will probably be their own subdivision at Volkswagen. I wonder if Alfa Romeo would be placed in the group with them?
Sergio Marchionne is eyeing General Motors for one reason.. the $25 Billion in GM’s cash reserves and GM’s ability to print money after coming out of bankruptcy while FCA is bleeding money; getting control of GM and the $25B would allow FCA to pay off it’s debt as well as have the cash to plan for the future.
Marchionne reminds me of Bill Cosby.. as Marchionne tells General Motors to relax as it’ll be good for everyone.
I’m guessing that, right now, it’s less about what FCA can offer GM, and vice versa.
This latest move, possibly , may relate more to the precipitous decline in GM’s market cap (negative $7 billion last week), the yet-to-be-determined fine for Cobalt/Ion, and reduced prospects in China, Russia, India and Europe.
Those factors (and who knows what else) could conspire to make GM “affordable” to Serge if he’s aligned with some hedge fund(s) or other bigass investors who can bankroll it and force GM’s hand.
Not a complete takeover – just enough of a stake that they can bully their way into a seat or two on the B of D, and have enough shares to create a formidable voting block.
Unlikely, but not outside the realm of possibility. And there’s a lot of merger and acquisition activity right now.
Anyway, it struck me as odd that Sergio reappeared on the scene not long after the carnage in China.
Maybe he’s as totally dismissible as we thought. And maybe not;
either way, another overly dramatic Italian opera in the making.
You kind of have the idea.
The truth is his plan is one that could work on most companies but he has targeted GM as their stock price is the lowest at the moment and they have the most resources.
The problem is the many bankers and investment people who he thought was with him told him he is nuts.
The plan could be done as it happens every day to many companies but in his case he does not have the money and anyone who does really has shown no interest.
Fiat has nothing to help GM as they have no money or outside Jeep anything they really don’t have or need.
On the other hand GM has much to offer FCA but if they go with Sergio he will want to be in charge and he will want to pump the money and like into Alfa not Chrysler where the money will be made.
If he was gone and someone stable in charge till the new owners could take over he may get a small following but as of now he himself has scared off most of those who can help him more than Chrysler scaring off the money people themselves.
Sergio is not much unlike Napoleon and I do not say that in jest.
Why not toss Sergio a bone and let him merge with Saturn. LOL.
This guy is an idiot! He took over Chrysler and now he thinks he can take over GM. Actually Chrysler saves Fiat from bankruptcy and down the road, bankruptcy is still looking Fiat in the face. Now he thinks, he can repeat the same act. He must think we Americans are super dumb.