Fiat Chrysler chair Sergio Marchionne is keen to find a merger partner, even if it’s General Motors:
The search, which is coming up blank thus far, is the latest in the CEO’s attempt to find a happy ending for his increasingly desperate romantic tragicomedy film, fearing excess production and duplicate costs in engineering, R&D et al threaten future profitability of the overall industry.
For now, though, FCA’s low profit margins do not make for a good partner with stronger players, while Marchionne’s dealings with GM leave much to be desired. In 2005, he convinced the Detroit automaker to pay $2 billion to not buy Fiat — in hospice care by then — a move which also dissolved a five-year-old partnership to produce engines and transmissions together.
If it’s worth $2 billion not to buy Fiat, what’s it worth not to buy Fiat and Chrysler as a unit?
More recently, Marchionne attempted to woo GM back with an email to CEO Mary Barra suggesting as much. The automaker is transitioning its lineup to global architectures and can build said lineup on a broader scale than FCA. GM is also undergoing an internal consolidation to further boost profits, a plan Barra and others in management won’t allow to be derailed by outside distractions like Marchionne holding up a boombox in front of the RenCen playing Peter Gabriel, hoping GM will say anything but no.
Sooner or later the accountants are going to come for Sergio and ask why he stayed so long with an operation that is clearly not a growth enterprise.