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VW, Fiat CEOs Paper Up Angry Dispute

Winterkorn, Marchionne find some common ground over industry crisis.

by on Sep.28, 2012

Smiling faces? VW's Martin Winterkorn and Fiat's Sergio Marchionne emerge from a meeting aimed at resolving their vocal and public differences. Photo credit: Bloomberg Television.

Two of Europe’s top automotive executives have – at least for now — papered over an increasingly fractious dispute that threatened to further divide an industry facing a sharp slump in sales and increasingly serious losses.

The dispute between Volkswagen CEO Martin Winterkorn and Fiat CEO Sergio Marchionne has been brewing for months but seemed to reach a new level of frustration in the build up to the 2012 Paris Motor Show – which industry officials have hoped might help rekindle European consumers’ love affair with the automobile.

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The two executives emerged from a meeting of the European automotive trade group ACEA, Friday morning, shaking hands and promising to work together to find common ground in an industry expected to reach a 17-year low in sales this year. The move preserves Marchionne’s role as the chairman of the group – a pulpit he has used to try to get reluctant German makers to agree to steps that could help ailing rivals, especially those from France and Italy.

Emerging from the meeting, Winterkorn insisted he and Marchionne are “friends,” and have “settled” their differences.  For his part, the Fiat chief suggested, “We all drink from the same trough and resources are limited.”

Marchionne has been vociferous in calling for major steps, such as industry-wide capacity cuts – supported by many analysts who believe there are at least eight more plants operating in Europe than were necessary even before the current sales slump.  Marchionne’s decision to close a Fiat factory in Sicily was a rare move, though both Opel and Peugeot are now planning closures of their own. But without German industry support – notably from giant VW – it will be difficult to win concessions from government regulators and union workers.

Winterkorn’s VW has been one of the few European makers to maintain sales and earnings momentum, many analysts betting he would prefer to let his competitors continue to weaken rather than sharing the necessary pain.

The Volkswagen chief has further exacerbated the situation by continuing to float the idea that Fiat should sell its struggling Alfa Romeo brand to its German rival – something that Marchionne has completely ruled out.

And, in a personal attack, VW chief spokesman Stephan Gruehsem said in July that Marchionne was not fit to lead ACEA.

The Fiat chief hasn’t made the situation any less competitive, pointing to VW as a major obstacle to an industry turnaround.  He has suggested that VW’s aggressive pricing policy, with incentives of as much as 30% of list prices, is leading to a “bloodbath.”

Marchionne isn’t alone, however. Susan Docherty, head of Chevrolet’s European operations, also called such practices “unsustainable” for the industry as a whole.

But while the differences likely weren’t completely resolved during the private ACEA meeting, it is clear that industry leaders are relieved to have had Marchionne and Winterkorn emerge smiling and, they hope, take their dispute out of the spotlight.

“It was a good meeting,” reported Daimler AG Chairman Dieter Zetsche, during a subsequent news conference.

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2 Responses to “VW, Fiat CEOs Paper Up Angry Dispute”

  1. Jerzjt says:

    I can’t help but wonder WWLD? What would Bob Lutz do if he was in Sergio’s shoes? Thunderdome, perhaps? Two men enter, one man leaves?

    • Paul A. Eisenstein says:

      It would be too bad that such a battle would be held privately. Could make very good reality TV…perhaps after Honey Boo Boo…?

      Paul A. Eisenstein
      Publisher, TheDetroitBureau.com