20 June 2015

FCA And GM Merger

The Jeep Renegade arrived in 2014, made by Fiat in Italy and Brazil.

In 2009, when Fiat gained a 20% stake in Chrysler Group, Sergio Marchionne was appointed CEO. Then in 2014 FCA was formed. In his time in charge he has tried to meld the two disparate entities into a united, efficient company. The results have been mixed, but overall he has been reasonably successful in what could have been a marriage from hell.

The downsides still remain, such as heavy debt and being behind in alternative propulsion technologies. VW wanted Alfa Romeo and I think he should have sold it. Instead valuable resources are being diverted into revitalising the marque and I wonder whether FCA can afford this somewhat risky diversion. There seem more fundamental issues that need attention, that would bring a better return for the company.

Now FCA is aggressively seeking a merger with GM, one that the latter seems not to want. Mr Marchionne feels that future demands on the auto industry requires fewer car companies to reduce duplicated costs. I see the point but it could also be achieved with collaborations without the need to merge, something other car makers generally prefer. It also makes FCA's position seem somewhat vulnerable, which isn't a good look.

Frankly, bringing the brands of the Fiat Group with Chrysler and then quickly adding all the GM divisions seems a task that would test any CEO. Had FCA given its Chrysler acquisition more time to be intergrated would have made sense before embarking on this merger. There seems to be frenetic haste in Mr Marchionne's plans.

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