FCA's Marchionne makes power point pitching car company consolidation

[12,000 RPM]

Wat is with these desperate overly public auto CEOs lol.

Interesting read.

http://www.fcagroup.com/en-US/investor_relations/events_presentations/quarterly_results_presentations/SM_Fire_investor_presentation.pdf

[SJ_GTI]

Definitely an interesting analysis from an investors POV.

[12,000 RPM]

U would have to have a ton of faith in those savings though. I would be curious to see how much was saved in development costs during the Daimler Chrysler fiasco 

[Galaxy]

An interesting and very frank presentation. Further consolidation would be a problem however when it comes to concentration of power.

[SJ_GTI]

An interesting and very frank presentation. Further consolidation would be a problem however when it comes to concentration of power.

I would also wonder how governments would react.

While the US Government is probably the most lax with this stuff, how would they react if, say, Renault, VW, or Toyota tried to purchase GM?

[12,000 RPM]

Yea thats a good point too.

Not to mention, low key most auto mergers seem to end in failure. DSM, Daimler Chrysler, Toyota GM, Ford and everybody etc. etc.

I was going to say companies should stay separate and codevelop components, but there will always be winners and losers in those kinds of arrangements. So IDK.

Again I would really love to see where he got those numbers for development savings though.

[93JC]

U would have to have a ton of faith in those savings though. I would be curious to see how much was saved in development costs during the Daimler Chrysler fiasco 

Nothing, probably, precisely because the only overlap between Daimler and Chrysler that was eliminated after "the merger of equals" was Chrysler's executive team; slowly but surely pushed out, excised. Daimler execs took over and the Chrysler half of the company became a tar-baby due to Daimler's arrogance and incompetence. Gott forbid a Mercedes-Benz be engineered by the same people who engineer Chryslers, using (gasp!) Chrysler parts, even if the underlying Chrysler parts are a more robust design and less expensive to build...

Marchionne's presentation seems to be absolutely on point and correct, and FCA is slowly amalgamating operations into a single, global automaker (doing what DaimlerChrysler was too stupid to do). But none of this is a revelation.

GM and Ford have been doing the same thing, just consolidating themselves rather than consolidating operations with separate car companies. For decades GM and Ford divisions around the world had been designing their own cars whereas now they're using the same chassis for all global products about the same size, getting engineering teams to focus on designing one underlying product architecture rather half-a-dozen at the same time. E.g. I lament that the Ford Falcon and Holden Commodore are on their last legs but it was colossally stupid for Ford and GM to keep building those products as long as they did. Why would Ford build a Focus in North America and an entirely different one in the rest of the world? Why did GM build the Cavalier/Sunfire, Astra and whatever the same-sized Daewoo was?

Further consolidation of the automobile manufacturers is something that has been on the horizon for a while now. Peugeot/Citroen will almost certainly get gobbled up by someone else or go belly-up. Mitsubishi might sell off their automotive arm or just stop building cars entirely. This is not groundbreaking or revolutionary thinking.

[CALL_911]

/thread

[Soup DeVille]

I can't trust the judgement of the guy who took the Dodge name off of Dodge trucks.

[12,000 RPM]

Nothing, probably, precisely because the only overlap between Daimler and Chrysler that was eliminated after "the merger of equals" was Chrysler's executive team; slowly but surely pushed out, excised. Daimler execs took over and the Chrysler half of the company became a tar-baby due to Daimler's arrogance and incompetence. Gott forbid a Mercedes-Benz be engineered by the same people who engineer Chryslers, using (gasp!) Chrysler parts, even if the underlying Chrysler parts are a more robust design and less expensive to build...

Marchionne's presentation seems to be absolutely on point and correct, and FCA is slowly amalgamating operations into a single, global automaker (doing what DaimlerChrysler was too stupid to do). But none of this is a revelation.

GM and Ford have been doing the same thing, just consolidating themselves rather than consolidating operations with separate car companies. For decades GM and Ford divisions around the world had been designing their own cars whereas now they're using the same chassis for all global products about the same size, getting engineering teams to focus on designing one underlying product architecture rather half-a-dozen at the same time. E.g. I lament that the Ford Falcon and Holden Commodore are on their last legs but it was colossally stupid for Ford and GM to keep building those products as long as they did. Why would Ford build a Focus in North America and an entirely different one in the rest of the world? Why did GM build the Cavalier/Sunfire, Astra and whatever the same-sized Daewoo was?

Further consolidation of the automobile manufacturers is something that has been on the horizon for a while now. Peugeot/Citroen will almost certainly get gobbled up by someone else or go belly-up. Mitsubishi might sell off their automotive arm or just stop building cars entirely. This is not groundbreaking or revolutionary thinking.

Consolidation within a company makes sense.... MB, BMW, Porsche and other super profitable companies have been selling the same cars worldwide for decades, just with little tweaks here and there. But merging different companies is tough because of the culture clashes and power struggles. If it's a merger as dude is calling for, who gets to call the shots?

Only successful...merger?... I can think of is Renault/Nissan, and that I think is largely in part because Renault was on death row before Nissan pardoned them. Plus Ghosn is a master pragmatist who knows how to cut costs without destroying product. But FCA gobbling up weak companies is probably not a viable strategy- there are good reasons why Lancia died and companies like Mitsubishi are in their death throes. Aside from paying to gobble up market share a lot of weak companies are just not worth looking at.

And even with strongish solo companies it will be tough. Look at Mazda for example. FCA's cars are generally pretty heavy with a lot of turbocharging. Mazda's design philosophy is the opposite. Both companies have basically brand new platforms where they have product overlap (and IMO Mazda has the much better platform). Does FCA buy them up now and wait until they need new platforms? Will FCA abandon its platforms? Will FCA make Mazda abandon its platforms and engines? There are just a lot of huge decisions to make that can easily torpedo the whole merger and destroy the value of either or both of the brands. It is just too huge of a gamble. Internal consolidation and perhaps some cross-company platform sharing is OK, but full on mergers, no way, too much.

[Madman]

Both GM and Toyota have allegedly rebuffed Marchionne's inquires concerning talks of a merger.  Ford is clearly out of the takeover game, so who else could FCA take to the alter?  How about these possible candidates?.......

1)  Mazda.  No longer affiliated with Ford, Mazda looks to be quite exposed.  FCA and Mazda already have a link together, as Fiat will soon be selling a new Spider roadster based on the new MX-5 and built in Japan by Mazda.  Could this partnership lead to something bigger?

2)  BMW.  Lots of potential for Fiats, MINIs and small front-drive BMWs to share a common platform.  Likewise, bigger Bimmers, Alfa Romeos and Maseratis could share the same oily bits.  A merged Fiat-Chrysler-BMW could cover the entire price/product spectrum.

3)  Renault-Nissan.  Infiniti and Alfa Romeo seem like a natural pairing.  Renault is weak in the SUV sector and can use assistance from Jeep.  But could two egomaniacs like Marchionne and Ghosn run a car company together?  I think NOT!

4)  PSA Peugeot Citroen.  Like Fiat, PSA are masters of small cheap hatchbacks, but they lack a premium brand.  Alfa and Maserati fills that gap.  Dongfeng recently purchased 14 per cent of PSA stock, which could also open the door to an influx of Chinese money.  Speaking of China.....

5)  One of many Chinese manufacturers.  China is flush with cash and craves western brand names with History and Heritage™ they can use to lend their own products some much-needed credibility.  See Geely and Volvo, SAIC and MG.  China has become the partner of last resort whenever western companies refuse to play ball.  Here's a list of potential partners....

http://chinaautoweb.com/chinese-brands/


Consolidation in the car industry seems inevitable.  The only questions are who will merge with whom and when.

[12,000 RPM]

Most probable one I see is Mazda. But I feel like the culture clashes are insurmountable. FCA's FWD platform is the antithesis of the Skyactiv concept. Both companies are heavily invested in their current path.

I think unhitched codevelopment is the way forward. Car companies dont have to merge to co-design cars. Look at the Freeze Breeze for example. Toyota and Subaru have nothing to do with each other, but they made a car. FCA has to collab with other manufacturers whose cars share the same weaknesses as theirs.

[MX793]

I think unhitched codevelopment is the way forward. Car companies dont have to merge to co-design cars. Look at the Freeze Breeze for example. Toyota and Subaru have nothing to do with each other, but they made a car. FCA has to collab with other manufacturers whose cars share the same weaknesses as theirs.

Toyota owns GM's former stake in Subaru's parent company: Fuji Heavy Industries.  They've been building Camries in Subie's Indiana plant since 2007.

[Madman]

Another potential merger partner for FCA might be Hyundai-Kia.  Hyundai wants to move upmarket but that's hard to do without a viable upmarket brand name which FCA can certainly provide.  Hyundai already have a rear-drive platform (Genesis and Equus) which would have to be sharpened up and made less barge-like to make a convincing Alfa Romeo, but it could be done.  And Chrysler could do much worse than using Hyundai platforms for their future models.

[12,000 RPM]

Another potential merger partner for FCA might be Hyundai-Kia.  Hyundai wants to move upmarket but that's hard to do without a viable upmarket brand name which FCA can certainly provide.  Hyundai already have a rear-drive platform (Genesis and Equus) which would have to be sharpened up and made less barge-like to make a convincing Alfa Romeo, but it could be done.  And Chrysler could do much worse than using Hyundai platforms for their future models.

That's actually a better than bad idea.

Dont forget the Genesis Coupe. Hyundai can make a decent RWD platform, and I am almost certain the current Genesis sedan platform is scalable.

FCA's Alfa issue isn't platforms though. It's Maserati. Maserati already has a 5 fighter, a 7 fighter and a midsize SUV on the way. Wat room does that leave for Alfa? Maser might as well come down and bring back the Biturbo to fight the 3 and leave Alfa to do pure sports cars. Marchionne put the two companies in a tight spot.

[MexicoCityM3]

Good presentation, just went through it. Execution risks may be underestimated IMO.

[12,000 RPM]

I want to see his maths

[Madman]

That's actually a better than bad idea.

Dont forget the Genesis Coupe. Hyundai can make a decent RWD platform, and I am almost certain the current Genesis sedan platform is scalable.

FCA's Alfa issue isn't platforms though. It's Maserati. Maserati already has a 5 fighter, a 7 fighter and a midsize SUV on the way. Wat room does that leave for Alfa? Maser might as well come down and bring back the Biturbo to fight the 3 and leave Alfa to do pure sports cars. Marchionne put the two companies in a tight spot.

I can see Maserati being positioned at a Bentley fighter.  That would leave plenty of room for Alfa to slog it out against the more "common" BMWs, Audis and Benzes.  Word is Bentley is planning a 5 Series sized sedan, which will directly target the Ghibli.  Its not hard to imagine Maserati and Bentley offering a car of similar size to the 5 Series but with more features and exclusivity, at a higher price of course.

[12,000 RPM]

Bentley fighter lmao. They have already put themselves in the "mainstream luxury" bracket. Nobody is paying 200-300K for a Maserati, they never had that kind of brand equity.

[Madman]

Bentley fighter lmao. They have already put themselves in the "mainstream luxury" bracket. Nobody is paying 200-300K for a Maserati, they never had that kind of brand equity.

I wouldn't exactly call Maserati "mainstream"!   

[12,000 RPM]

Its def crossshopped with the likes of Mercedes and BMW.... not the likes of Bentley, RR, Aston Martin etc.

[Madman]

Its def crossshopped with the likes of Mercedes and BMW.... not the likes of Bentley, RR, Aston Martin etc.

That's why I said "position" (or perhaps I should have said "re-position") Maserati as a Bentley fighter.  And have the Maserati coupes square up against Aston Martin while leaving the true supercars to Ferarri.

What FCA doesn't have room for is Lancia.  Lancia is all but dead and, at this point, is beyond saving.  Prior to being taken over by Fiat, Lancia and Alfa Romeo were bitter rivals.  There is just no room for both of them under the Fiat umbrella, just as there was no room for both Fiat and Autobianchi.  Maybe Fiat could flog off the Lancia and Autobianchi names to some Chinese car maker desperate to give their cars some Italian flair?

[12,000 RPM]

Mercedes couldnt position the Maybach up with the likes of Bentley and RR.......... its the car business, I think Maser is a better proposition for total profit. Selling 60,000 or w/e Maseratis in the 80-100K price range seems like an intuitively better bet than selling ???? Maseratis at 200-300K. Maybe they can make some halo cars but I think Maserati is well positioned as is. Which again comes back to "where does Alfa fit in".... perhaps if Alfa positions itself as an Italian Mazda, making sports cars and real affordable RWD sports sedans, they will have a legit shot at success. But they will have to carve that niche out and not fuck it up. And accept being a low volume, low profit operation. Risky

[Galaxy]

BMW would be the best fit in terms of product, however BMW is 47% owned by the Quandt family, and they want independance. The other companies have to much overlap.

[Galaxy]

So the Wall Street Journal is reporting that FiatChrysler is considering a Merger with General Motors.  That would be utter insanity, and if the governments involved grant anti-trust immunity then they are simply corrupt.

[12,000 RPM]

News isn't FCA considering merging with GM, it's GM considering merging with FCA. That would be a mega clusterfuck. What would get axed? So much overlap