Fiat Chrysler Chief Sergio Marchionne is making it clear he’s willing to form partnerships with his competitors; however, he’s not getting many takers. General Motors’ CEO Mary Barra ended any speculation about the automaker’s interest before it could begin during the company’s first-quarter earnings call today.
Barra told analysts that the company is not looking to merge with or acquire any other automakers as the focus is on the company’s profitability plans … as currently configured.
Marchionne and other FCA officials have been directly and indirectly suggesting they’d be willing to enter into a partnership with another automaker for several months even though the ink is barely dry on the deal that completed FCA.
Marchionne has made a number of comments in recent months underscoring his desire to address fundamental problems that could limit FCA’s ability to compete in an increasingly competitive global auto industry.
FCA Chairman John Elkann apparently agrees, telling shareholders at Exor, which owns 29.2% of FCA, “I’m convinced that the industry needs and will see more consolidation in the future.”
The former Fiat SpA stepped in during Chrysler’s 2009 bankruptcy, initially acquiring a 20% stake in the troubled U.S. automakers, then growing it through a series of steps that led to a complete takeover and merger of operations last year as the newly formed FCA, which is the world’s seventh-largest automaker.
One of the reasons Marchionne may be looking for another partner is he’ll need them help FCA move from 4.6 million in global sales to his goal of 7 million by 2018 – which would still lag far behind industry leaders Toyota, Volkswagen and General Motors, all of which are looking to top sales of 10 million this year.
During a media roundtable at the Geneva Motor show last month, Marchionne underscored his interest in finding some sort of partner. He also suggested FCA would be open to a variety of alternatives that could range from a series of joint ventures to a more formal alliance, possibly even a merger.
(For more of what Marchionne had to say in Geneva, Click Here.)
He suggested even a partnership with GM or Ford would be “technically feasible.” Barra reiterated GM’s position of “no thanks” today and Ford officials have also said a link-up is not on the horizon.
However, just because two makers have said “no,” it doesn’t mean there aren’t other dance partners. In fact, FCA and Mazda worked together to develop a new sporty car. For Mazda it’s the new MX-5 Miata and Fiat will call it the 124 Spider.
(Click Here for details about Fiat Chrysler’s desire for another merger.)
“In the case of Mazda, they had something we didn’t have and we continue to look at opportunities like that going forward,” Marchionne said last month.
Another potential partner for FCA is PSA Peugeot Citroen. The struggling French carmaker entered an abortive alliance with GM several years ago and is said to be looking for an alternative to help address its problems. Like Fiat Chrysler, Peugeot needs to become a more global player. And it has to fill in numerous gaps in its product line-up.
(To see more about GM’s Q1 financial results, Click Here.)
“PSA is in kind of the same predicament” as Fiat Chrysler, said George Petersen, a veteran analyst with consulting firm AutoPacific, Inc. “They may be in a mood to talk.”