Has FCA’s on-off romance with GM entered a new phase?
Last week two seemingly unrelated news items landed, which taken on face value elicited only mild interest. But to a cut-price Max Warburton such as myself, the two stories add up to something a good deal more intriguing.
Last Week, Automotive News Europe reported on Sergio Marchionne’s quote in The New York Times on FCA’s withdrawal of its offer of a merger with General Motors, saying; “I was rebuffed once, and I won’t go back to get my nose bloodied a second time”. This alludes of course to General Motors CEO, Mary Barra’s outright rejection of his overtures. On the day, it sounded a little disingenuous, especially knowing Marchionne’s enthusiasm for the alliance and the likelihood of him doing just about anything to see it happen. But I left it there.
However, the following day, ANE posted a story on the potential exposure facing General Motors as China’s economy slows and the automotive goldrush it fuelled starts to abate. ANE reported that China’s car market remains set to grow, but that growth is predicted to fall from 7 to 3% this year. Quoting sources from Barclays Bank , ANE suggested General Motors could be amongst the biggest industry losers as China slows. Barclays cited that GM relies on China for 40% of its net income and 20-30% of its cash flow. Having orchestrated a stunning turn-around from bankruptcy in 2009, the World’s largest car maker has not exactly enjoyed an easy ride to prosperity, struggling with labour disputes and damaging lawsuits. So while the Chinese downturn isn’t exactly a catastrophe, the loss of revenue could have far-reaching implications for the car giant.
Which got me thinking…
So, Sergio goes cap in hand to Michigan and humbly asks for Mary’s hand in matrimony, only to be haughtily rebuffed. Mary, an attractive woman in the prime of life, feels she could do better for herself and well, Sergio’s no oil painting. Marchionne tries forcing the issue, but finding the gates firmly bolted, reluctantly withdraws to lick his wounded ego. But behind closed doors, he keeps the candle burning. Meanwhile, Mary receives some alarming news regarding her investments, suggesting a sizeable chunk of her allowance is likely to be cut off. Facing ruin, she realises that marriage proposal doesn’t appear so distasteful after all. So what if he’s no prince charming and has a regressive line in knitwear, Sergio’s available and above all, willing.
Of course General Motors and Fiat did have a brief dalliance some years back; one which Sergio played to perfection in extracting Fiat from. In the intervening years however, GM has once again become Marchionne’s heart’s desire, the yarnmeister telling the NYT last week; “I’ll wait and we’ll get it done”. So much for retrenchment. More likely is the possibility that Sergio has torn a leaf out of the Ferdinand Piëch playbook and with the winds from Asia turning chilly, they’re looking increasingly like blowing in Marchionne’s direction. That waiting game might just pay off.