FCA’s perennial wallflower lashes out.
We’ve all had to cope with rejection at some point in our lives – smiling grimly through the tears, as we peel our shattered egos off the floor. But no stoic is our Serge. Far from taking it on the chin, he’s gone on the offensive, raging to industry analysts this week at the unfairness of it all. Has he lost his mind?
Consolidation has been the name stencilled on Marchionne’s bridal veil ever since the crash of 2008. By now, according to his musings, we should have witnessed bed-hopping on an industrial scale as manufacturers desperately scrabbled to avoid being the last set of car-keys in the swinger’s bowl. Instead, stalemate has ensued, with even struggling manufacturers instead taking steps to put their own houses in order.
Until recently, Sergios’s deft manoeuvrings have plugged the breaches in FCA’s leaky vessel, but you can only do so much with so little. Having laid out his stall last year to an ever more sceptical audience, the porous core of the Marchionne plan is finally being laid bare.
With the definitely-maybe relaunch of Alfa Romeo imminent*, the terrifying sums of money required have proven vastly more difficult to raise than anticipated. Put bluntly, it’s become clear last year’s grand plan failed the credibility test, prompting Sergio to don fishnets and stilettos this season in an unseemly attempt to woo lenders and potential suitors. Problem being, nobody wants to dance.
Having announced dispiriting earnings figures, and deferring a portion of Ferrari’s share issue, Marchionne again pushed the consolidation agenda to industry analysts this week, arguing they should be the ones agitating for action. Despite the plausibility of some of his arguments, this outburst appears to have backfired, fuelling widespread speculation of panic.
Marchionne stated it wasn’t a ‘matter of life and death’ for FCA nor that it was his ‘final big deal’, prompting senior Bernstein analyst Max Warburton to comment to Automotive news yesterday; “In reality, it’s all of those things”. Industry consultant Maryann Keller added; “What Sergio is panicked about is how much sales are growing while profit margins are falling. He should be making piles of money right now.”
How FCA can finance an entire range of class-competitive Alfa Romeos over the next five years with what amounts to a couple of grubscrews and some leftover tinsel remains a mystery as perplexing as Sergio’s penchant for angora. Because if Maserati’s experience is any guide, next year’s Alfa relaunch will begin optimistically, plateau rapidly, before running into trouble once the fissures start appearing.
With FCA’s recovery pinned on its success, how long before a tipping point is reached and Marchionne is forced into a fire sale of FCA’s European assets? It’s entirely possible that Sergio’s rivals are awaiting this very eventuality before acting. It’s equally plausible Marchionne knows this but has called the industry’s bluff. Desperate times call for desperate measures – what could he come up with next? Well, I hear Ferdinand Piëch isn’t up to much these days…
*Stay tuned for yet another exciting postponement folks…