There’s Something About Mary

Has FCA’s on-off romance with GM entered a new phase?

'I'm sexy and I know it...' Sergio on the pull. Image via benchmarkreporter
‘I’m sexy and I know it…’ Sergio on the pull. Image via benchmarkreporter

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.

You are the quarry. GM's Mary Barra. Image via Inautonews
You are the quarry. GM’s Mary Barra. Image via Inautonews

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.

Author: Eóin Doyle

Founding Editor. [Dis]content Provider.

7 thoughts on “There’s Something About Mary”

  1. Would this mean we can be looking forward to GM V6s in Alfa’s again? GM’s European alliances never seem to endure or produce very much (what, for example, did that with PSA deliver?), so SM is probably not going to be playing Mr Banks to that other Mary so popular on celluloid.

  2. Eóin this is nicely written as always but I really hope your nightmare scenario (at least to me) of an GMFCA doesn’t become reality. GM does not need what Sergio is selling – they have more than enough brands, factories and dealerships around the world to deal with without adding a bunch more. In an industry struggling with overcapacity I can’t see the financial sense of adding more healthcare costs in the US, more high-cost production capacity in Europe, and more brands that are either direct rivals for existing GM brands, are struggling, or both. OK, and Ferrari/Maserati. I must admit, the idea of the next Ferrari California sporting a Chevy smallblock V8 sounds like fun. Perhaps GM could hire Chip Ganassi to run the F1 team? Scott Dixon driving for the Scuderia! Hey, maybe what Sergio is selling isn’t so bad after all 🙂

    I did wonder if we could apply to one of the philanthropic funds to adopt FCA as an aid project, providing work and skills development to embattled communities (Detroit, Turin etc.) around the world. Then Sergio could retire and maybe we could have fair trade organic single origin Lancias to drive. Just a thought…

    1. Mark, you make some very valid points and frankly, the potential implications for such a tie-up deserve an article in its own right. Certainly, the complications appear insurmountable. What would you call it, for a start? But for Sergio, the nightmare scenario is already upon him; FCA neither big or small enough to navigate the current environment.

      Would such an alliance work? There is an outside chance that something could be cobbled together, but the chances of it lasting are remote in the extreme. It’s far more likely result in carnage, rapidly descend into acrimony and counter-accusation before disintegrating messily and in FCA’s case, terminally. But by then Marchionne would be sipping margarita’s at Ferdi Piech’s Alpine retreat for superannuated auto moguls.

    2. I just find Marchionne’s whole ‘the only way is scale and mergers’ mindset questionable. FCA has two currently-viable Italian premium brands, two more Italian premium brands with existing goodwill that could be resuscitated with time and investment, a legendary brand of 4wd vehicles equal in stature to Land Rover. a mass-market European brand, two mass-market American brands differentiated by luxury and performance image. Commercial vehicle brands on both sides of the Atlantic, high performance road and racing car brands on both sides of the Atlantic, two major OEM parts and accessory brands… Yes,of course. Hopeless without another merger. It’s high finance dear car nerds, you wouldn’t understand.

    3. FCA is at a crossroads. The options as I see it is to become bigger with all the complications and overlap that implies or to become significantly smaller; focusing upon higher margins and lower volumes. Something akin to the JLR approach, if you like. The latter model could work, given the Italian brands Marchionne has to work with, especially if he ditches his upmarket ambitions for Fiat. The big problem is he’s not making money and is having difficulty raising it. Largely because he over-promises and habitually under-delivers. Shrinking FCA is probably appealing, but would be political suicide in Europe, resulting in factory closures and mass lay-offs. Given Italy’s shaky political landscape, and the ongoing Euro crisis, this really is unthinkable. So the only other option is to get bigger still. Hence the ‘what light through yonder window breaks’ wooing of the fragrant Ms. Barra.

      In your face, Max…

    4. I was going to write something that picked up on your comment about Mr. Marchionne’s tendency to overpromise and underdeliver (see Alfa Romeo relaunches up to the latest one) and was reminded of the Maserati Ghibli launch ad tagline – We have prepared. Now we strike.

      But I ended up watching Maserati videos instead. There is a nice one about the Alfieri concept where Lorenzo Ramaciotti and colleages talk about the development process in Italian.

      Since Eóin has pretty-much nailed his analysis (are there any vacancies at IHS Automotive or are you angling for a role with one of the investment firms?) and I distracted myself with Maserati promo videos, here’s a question instead. If you dropped in a Ferdinand Piech type to replace Sergio Marchionne and turn around FCA, could they do it? Or is the conglomerate too far gone?

    5. Mark. I think the problem is that VAG is VAG. The market accepted the Piech model (conceit?), appreciated his obsession with panel gaps and visual continuity and didn’t laugh at his grandiose eccentricities. VAG is now the market’s preferred provider of conservative transport for the discerning. If a Piech clone turned up at another car maker, it’s probable that he would fail dismally.

      But your comment about ‘too far gone’ is telling. Despite, or because of, its poncing off its glorious past with the 500 sub-brand, over the past few years I’ve lost my pre-conception of what a good Fiat should be, except it shouldn’t be a Corsa. If Alfa thinks that a 500+ hp Cloverleaf is the best way to reveal the new Giulia, it’s wrong. And Lancia is already lost in the mist – the only people who will ever care about it have gravitated to the pages of DTW.

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