Oh, dear more actual news at DTW.
Without wanting to drag Brexit into this**, I have to note that Larry Elliot at the Guardian is now visibly wrong about another big thing, the Renault-FCA merger (if it is even a realistic prospect). For your information, Elliot has been at the very least tolerant of the lunacy of Brexit. Now he is suggesting that the mooted, hinted, suggested alliance of FCA and Fiat is even worth considering.
The core of his recent article is that “Frosty relations between France’s Macron and Italy’s Salvini could scupper talks over £29bn merger”. It sounds so knowledgeable but Franco-Italian relations are 800 km beside the point.
Second, it’s not 1976 any more, a time when national leaders could push around large corporations as de Gaulle did with Fiat and Citroen. But the problem is so much more fundamental: the idea of FCA linking to Renault is as insane as suggesting someone should consider marrying a syphilitic zombie. In this instance Renault-Nissan is the “someone” and FCA is the “syphilitic zombie”. While Renault has had its downs and up, the F in FCA has been only able to destroy value since about 1985 and the C part nearly killed Mercedes (I’ve no sympathy for Mercedes). Renault-Nissan do not need FCA. Nobody does.
The other day we were reminded of Fiat in the late 1990s. In August 2014 we presented the sad story of Fiat’s diminishing range of cars and engines. Both articles are evidence that Fiat is like Chrysler. Both are value-destroying ghouls; the writing is on the wall for FCA. It can’t make the leap to electric engines on its own; its engine development capacity is frail and so it is casting around for another victim to latch on to.
I will return to Larry Elliot’s thesis here: “There are two big arguments in favour of the deal. The first is there is a global glut of automotive capacity that is already forcing companies to cut production, close plants and lay off workers.
The second is the age of the internal combustion engine is drawing to a close. Technological change has meant progress being made towards autonomous, self-driving cars, while the need to combat the climate emergency has forced car companies to think about a new generation of electric-powered vehicles.”
Dealing with the first paragraph, the glut of automotive capacity does not mean that FCA should merge with Renault. It means FCA should be wound down to its profitable components which should be sold to anyone interested. Elliot seems to assume the world owes FCA its living. No, it doesn’t.
The second paragraph also has a kernel of obviousness, that we’re in a shift to electric power-trains. That does not make it logical to deduce FCA should bite like a lamprey into the flesh of Renault-Nissan to survive. It means FCA is an obvious candidate for liquidation. It’s not even in the stadium for a race it will lose anyway.
At this point I’ll head off in another direction and close with reference to an article in the current edition of the NYRB, about the future of oil. It was by Bill McKibben who reviewed 2020 Vision: Why You Should See The Fossil Fuel Peak Coming. The bit that caught my eye was this: “Auto analysts are already warning consumers to think twice before buying a gas-powered car, since its resale value may fall dramatically over just the next three years.”
It’s not the decisive blow but is yet another reason customers may not want to buy FCA cars in the near future. Any car company considering a merger with FCA would be like someone diving into an icy sea to rescue a corpse weighted with chains.
** I hate to stymie debate. It’s because this isn’t a news or politics site that I don’t want to discuss Brexit. There are plenty of other fora for the subject, catering to both sides and neither.