By on June 6, 2019

Thursday night’s falling apart of the proposed Fiat Chrysler-Renault merger was a setback for FCA, but the automaker wants everyone to know it remains on the hunt for a willing partner. Essentially, nothing’s changed from the days when former CEO Sergio Marchionne made eyes at the likes of General Motors and Volkswagen, only to receive the cold shoulder.

Sure, it didn’t work out with the French, Chairman John Elkann wrote to FCA employees, but that doesn’t mean FCA won’t soon find a date for the dance.

The letter, obtained by , sees Elkann claiming the company withdrew its proposal to Renault to protect FCA employees and stakeholders, adding it took the discussions “as far as they can reasonably go.”

“The decision to engage in these discussions with Groupe Renault‎ was the right one and one we took after much preparation on many fronts,” the Agnelli family scion wrote.

Neither side in the abortive merger has said much about what specific issue or issues caused the talks to fall apart, but FCA’s comment about “political conditions in France” lends credence to rumors of hefty guarantees demanded by the French government. Those included a French headquarters for the combined entity, assurances for French workers, and a special dividend for Renault shareholders. Allegedly, the French government also wanted a representative on the board.

Not deterred by the experience, FCA remains on the hunt for someone to share platforms and development costs with.

“FCA, under Mike Manley’s leadership, is an outstanding business … with a clear strategy for a strong, independent future,” Elkann wrote. “We will continue to be open to opportunities of all kinds that offer the possibility to enhance and accelerate the delivery of that strategy and the creation of value.”

One future possibility is a strengthened partnership with France’s PSA Group, which was the subject of numerous rumors earlier this year.

[Image: Fiat Chrysler Automobiles]

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45 Comments on “FCA Chairman: Make No Mistake – We’re Still on the Prowl...”


  • avatar
    sportyaccordy

    I changed from public school to a small prep school in 6th grade. It was small enough that every year they gave everyone a phone book of all the other students. I took that phone book and one by one called every girl in my grade (in descending order of attractiveness) to ask if they’d be my girlfriend (for what purpose, I don’t know). So I have a deep appreciation of FCA’s plight, and more importantly their approach.

  • avatar
    Oberkanone

    你有兴趣合并吗?
    Nǐ yǒu xìngqù hébìng ma?

    Practice the above Mr. Elkann.

  • avatar
    dukeisduke

    I’m surprised the merger talks didn’t go further – FCA seems desperate.

    • 0 avatar
      aja8888

      Yes, especially since they were talking with the French, who have never made a car worth having. (LOL) And were just asking for a load of free money (guarantees) to into the socialist government and population.

    • 0 avatar
      thelaine

      The key missing ingredient, in my opinion, is alcohol. This is why they keep failing. They just need to relax. Try making Renault laugh. Show some self-confidence.

  • avatar
    Raevoxx

    “FCA, under Mike Manley’s leadership, is an outstanding business … with a clear strategy for a strong, independent future,” Elkann wrote.

    -snort-

    Oh, sorry, that’s all I could muster.

  • avatar
    kkop

    It’s a good thing that this ‘merger’ didn’t go through. If you want an idea of how dealing with a French government-controlled business would have worked out, read up on the ‘merger’ of Air France and KLM airlines.

  • avatar
    Steve203

    This is getting absurd.

    While “unnamed, confidential sources” blame the French government, a government spokesman publicly said that all the valuation, job and facilities issues had been resolved to the government’s satisfaction, before FCA walked.

    Who else can FCA pedal itself to? First candidate would be Chinese, but the political reality in the US now says no way would the Chinese be allowed to buy Jeep.

    Anyone else would need to not already have a major market share, ie double digit, in either Europe or North America. That lets out VW and PSA (PSA is also part owned by the French government and part by the Chinese) in Europe and GM and Ford in North America. Daimler was burned by Chrysler once already, so they would probably stay away. BMW would look at the problems Daimler had trying to sell Chrysler’s mass market products, and stay away. Toyota is too big everywhere, and has hoovered up most of the other Japanese companies. Honda is too strong in the US.

    Hyundai/Kia have a 7.2% share in the US, and about the same in Europe. Combining with FCA would still have them nudging a 20% share here, larger than GM or Ford, and probably attract anti-trust scrutiny. Besides, would any of the Asian makers want to combine it’s non-union US factories with FCA’s union shops?

    I don’t see anyone that FCA can hook up with that doesn’t attract monopoly scrutiny or political heat of deal killing intensity somewhere.

    • 0 avatar
      Jagboi

      Why would anyone want to buy/merge with FCA? Just wait for them to go bankrupt again and buy what you want for pennies on the dollar. FCA is looking pretty desperate to merge with anyone, they can’t be in great shape internally.

    • 0 avatar
      ect

      “Who else can FCA pedal itself to?” Gee, I didn’t even know they were in the bicycle business…

    • 0 avatar
      Adder

      One word- Tata. Tata has serious issues securing financing and does not have the scale to make many of their platforms as profitable as they could be. In addition, their electronic systems are some of the worst in the industry. FCA on the other hand, is weak in emerging markets, behind in EV development and is also struggling with scale. Both struggle with union issues, so it isn’t as if they would be inheriting a new problem in that way. Think of all the parts sharing that could happen! Jaguar/Alfa Romeo/Maserati, Land Rover/Jeep, Tata/Fiat/Lancia, the possibilities are endless in that regard. Each automaker could plug one of the other’s principal weaknesses. Tata and JLR could use Uconnect, one of the best systems in the industry and FCA cash and FCA would have access to Tata’s advanced EV platforms. I realize there are other issues, China and reliability in particular, but I don’t think a better match could possibly be made.

    • 0 avatar
      Rtheoudele

      Correction,

      Chrysler was burned by Daimler. Daimler used up all of Chrysler’s cash reserves and pensions, invested it into the Mercedes brand and neglected to keep Chrysler products competitive then dumped them when there was nothing else to take.

    • 0 avatar
      dukeisduke

      Daimler wasn’t burned by Chrysler, and it wasn’t “a merger of equals”. It was a straight up takeover of Chrysler. Just a mistake made by Dr. Z.

    • 0 avatar
      Lorenzo

      Actually, Chrysler had no problem selling its own mass market products before the merger with Daimler – about 3 million annual sales in 1998. Daimler had problems selling the decontented models left after it stole Chrysler’s $12 billion stash for new models, and drove away the designers who produced the Neon and LH models.

      Daimler gutted Chrysler and sold the still-substantial hulk to Cerberus, who looted Chrysler’s financing operation, and let the government take it over and sell it for a pittance to Fiat and Sergio, who killed off its Dodge and Chrysler cars but had the sense to invest in Dodge trucks and Jeep.

      • 0 avatar
        Lorenzo

        BTW, every company that owned Jeep since the federal government stole the design from American Bantam has run into trouble, first Willys, then Kaiser, then American Motors, and then Chrysler. FCA has survived the “curse” – so far.

        American Bantam was bought out by American Rolling Mills, a steel company later known as ARMCO. they later merged with Kawasaki Steel’s US operations to form AK Steel. One of their biggest customers for sheet steel is FCA! If there’s a merger in FCA’s future, they should look no farther than AK Steel, returning Jeep to its roots and ending the “curse”.

        • 0 avatar
          Lorenzo

          BTW-2: Look at the roadster driven by Donald Duck in Disney cartoons – it’s a rip-off of the American Bantam 1938 60 series roadster, right down to the paint job!

      • 0 avatar
        Steve203

        “Actually, Chrysler had no problem selling its own mass market products before the merger with Daimler ”

        I have been developing a theory. 20 years ago, even 10 years ago, the big three, in particular, felt they needed to be “full line” manufacturers to grab sales in several segments. They also needed small cars to offset the fuel consumption of the large models as CAFE compliance at that time was based on a sales weighted average of everything produced.

        CAFE was reformed a dozen years ago. Now, each vehicle is assigned it’s own mpg “target”, independent of the fuel consumption of other models in the line. Due to that reform, the big three no longer need to produce any small models to raise their average mpg.

        The focus of big three management is no longer on volume. Their focus is on continually increasing average transaction price and gross margin per vehicle. Volume no longer matters. Read any big three sales report. They are bragging about the increase in those short term profit metrics.

        The FCA May sales report: “”On a year-over-year basis we have increased our average transaction prices by more than $3,000 a vehicle and still managed some notable sales increases,” said Reid Bigland, U.S. Head of Sales.”

        Bragging about jacking up prices another $3 grand, without scaring so many people away that sales drop, is the definition of great success today. Though they really don’t care if sales do drop. GM and Ford have switched to quarterly sales reports, and FCA joins them this fall, to help conceal the loss of volume as they squeeze their customers harder and harder for more loot per car.

        In this environment, they don’t want small/cheap cars in their line, because small/cheap cars would pull down their ATP. Take FCA for instance. In 2017 the Fiat 500 was getting long in the tooth and sales were falling, so they added content and cut prices. They reversed themselves in 2018 and jacked the price back up. They don’t care about volume, so where the Fiat 500 used to sell over 1,000/month, now they sell 300-400/month, but they make more loot on each one, and because they sell fewer, the 500 doesn’t drag down their ATP as much as if they sold 1,000 of them.

        That’s my theory. If left to themselves long enough, the big three will only have a couple plants each left, and everything they build will be priced at $100,000+

  • avatar
    APaGttH

    Kia/Hyundai is the only non-Chinese maker that makes any sense at all.

    • 0 avatar
      Robotdawn

      Honda would make great sense. If it wasn’t Honda, and culturally 180% opposed to FCA.

      No Trucks, minor Latin America and European presence.

      • 0 avatar
        newenthusiast

        “Honda would make great sense. If it wasn’t Honda, and culturally 180% opposed to FCA.

        No Trucks, minor Latin America and European presence.”

        So, wouldn’t that mean this theoretical merger of these companies would not have overlapping products? Wouldn’t that be a good thing?

      • 0 avatar
        RSF

        Maybe Honda would make sense, but talk about culture shock! FCA could pick up some pointers on reliability and fuel efficient vehicles and Honda could have a couple of money generating machines with Ram and Jeep.

    • 0 avatar
      ect

      Actually, I think Mazda would be perhaps the best partner for FCA. Complementary product lines and geographic strength.

  • avatar
    PrincipalDan

    “We will continue to be open to opportunities of all kinds that offer the possibility to enhance and accelerate the delivery of that strategy and the creation of value.”

    Hide yo kids, hide yo wife…

  • avatar
    EBFlex

    Pretty crazy that the European automakers are so shortsighted as to not want to merge with a company that makes some of the best vehicle sold today. Best Pickup truck line, Best SUVs, best performance sedans, etc.

    • 0 avatar
      Oberkanone

      The world is not flat. Try selling full size trucks, Chrysler 300, Dodge Challengers, Jeep Cherokee, etc. to European consumers. Sure, you will sell a few. Not any volume to write home about.
      FCA North American portfolio does not translate well. And despite Jeep being well known globally there is not a huge demand for Wrangler and Gladiator globally.

      Wait…was your post intended as sarcasm?

      • 0 avatar
        ajla

        “The world is not flat.”

        What does the “F” in “FCA” stand for again? FCA has brands in its portfolio that have been successful in places outside North America. It is short-sighted to act like whoever buys/mergers with them will only have Wranglers, Hellcats, and RAM 3500s to sell across the globe.

        Plus, the income a company makes in the North American market is still profit. For companies with no presence here, but still wanting one, a merger or buyout could be worthwhile.

        • 0 avatar
          Steve203

          “What does the “F” in “FCA” stand for again? FCA has brands in its portfolio that have been successful in places outside North America. ”

          Inexpensive Fiats don’t fit the strategy of high average transaction price and high gross margin per vehicle, so management doesn’t want them.

          The Fiat brand is, effectively, being phased out. Fiat was withdrawn from China. Betting is the Fiat brand will be officially withdrawn from India this year. in Europe, the B segment has been abandoned with the dropping of the Punto. It has been announced that no further development will be done on the Tipo and it will be withdrawn from Europe in a few years. The 500L is in a dying segment. The next gen 500 will be electric only. That leaves the Panda and 500X as the only two conventional Fiats in Europe that don’t have a death warrant on them.

    • 0 avatar
      deanst

      “Pretty crazy that the European automakers are so shortsighted as to not want to merge with a company that makes some of the best vehicle sold today. Best Pickup truck line, Best SUVs, best performance sedans, etc.”

      I assume this was meant to be sarcastic?

  • avatar
    conundrum

    Who’s left who’d look at FCA? Right now, they’re flush and debt free. No solo Japanese company would look twice at them. Hyundai has debt but might try a takeover because they’re nuts aggressive and regard everyone else as prissy fools. JLR might be a candidate but they’re small taters. Everyone else would tell them to take a hike. PSA is circling but Tavares won’t sign anything silly so it’s a giant maybe.

    That leaves Geely. So far, founder Li Shufu owns Volvo, Lotus, Lynk, a Danish Bank, 8% of Volvo Trucks, 9.5% of Mercedes-Benz, the Chinese factories that churn out his own brands, and the London Electric Vehicle Company that makes taxis. And he’s not owned by the Chicoms, although no doubt they wish they did.

    Other than that, FCA should put their nose to the grindstone and get some solid EV engineering going. Same with Ford, also absent from the chase. FCA wants to get it all for nothing, to keep the Agnellis in the splendour they so richly deserve after almost going bust before Marchionne. Only a fool would let FCA take them over, and the other way around nobody’s willing to pay top dollar for a backward company with very so-so quality ratings. Yup, get on with some hard work FCA!

  • avatar
    Oberkanone

    Ford communicated to investors it will offer 16 electric only models and 40 electrified models (offered in electric as well as gas/diesel/hybrid) by 2022.
    Ford is not asleep at the wheel.

    FCA has not committed to electrification in the near future.

  • avatar
    Oberkanone

    Ford communicated to investors it will offer 16 electric only models and 40 electrified models (offered in electric as well as gas/diesel/hybrid) by 2022.
    Ford is not asleep at the wheel.

    FCA has not committed to electrification in the near future.

  • avatar

    How about organic growth that Japanese companies learned to master so well? How hard is to hire engineers who know what they are doing and start developing new competitive cars and improving manufacturing processes and not squeezing suppliers to death?

    • 0 avatar
      JimZ

      it’s not the engineers that were ever the problem. the Japanese car companies did in the 1970s what Apple did to the phone market in the 2000s. Their management stepped back, looked at what the existing players were doing wrong, and said “we’re going to do those things right.”

      it really torques me how we s**t all over engineers in this country. In a lot of other cultures, engineering is considered a dignified profession. Here, any random idiot will call engineers “stupid” because something doesn’t work the way his dumb @ss thinks it should.

  • avatar
    Michael S6

    This fiasco was an attempt by Renault to force Nissan to completely merge with it by threatening an alternative merger with FCA. FCA was desperate enough to go along, but the ending was predictable.

  • avatar

    I still say Hyundai-Kia makes the most sense. They may call it a merger but it’ll be more like a sale. Dodge and Chrysler go away, Jeep and Ram survive and select Fiat/Lancia/Alfas continue in appropriate markets.

  • avatar
    Den E

    I’ve always felt the VW Group would be a perfect fit for FCA, and would provide VW with everything they are lacking, especially in the US – light/heavy duty trucks from RAM, rugged off-road vehicles from Jeep, and a minivan platform from Chrysler. The VW Group has been masterful at managing it large cache of brands, and would certainly have the capital leverage needed to breath new life in the Fiat, Alfa-Romeo, and Maserati product portfolios, as well. Make it happen!

    • 0 avatar
      Steve203

      VW is far too large outside of North America for a merger with FCA to clear what in the US is termed “anti-trust” scrutiny.

      In Europe, VAG holds a 23% market share. Nearest competitor is PSA with a 16% share. No way would VAG be allowed to add Fiat’s 6+% share to that. In Brazil, FCA is in second place with a 17.47% share, VW is third with 12.96%. Combined, they would tower over the current market leader, GM, which has a 18.11% share.

  • avatar
    Steve203

    And now, on Monday, the investment bankers are still planting stories advocating the divestment of Nissan as that is the only way the Renault/FCA merger could clear US anti-trust scrutiny, so the bankers can collect their multi-million dollar fees.

    “Exclusive: FCA-Renault revival may hinge on Nissan stake cut – sources”
    https://finance.yahoo.com/news/exclusive-fca-renault-revival-may-031400971.html

    While the French government, as a Renault stakeholder, supports the alliance as, long term, Renault realizes more synergies with Nissan.

    “France’s Le Maire says ‘essential’ to bolster Renault-Nissan alliance”
    https://www.reuters.com/article/us-renault-m-a-fiat-chrysler-le-maire/frances-le-maire-says-essential-to-bolster-renault-nissan-alliance-idUSKCN1TA0AD

    So, who will win, the bankers looking to make a quick buck, or the French government, more concerned with the long term viability of Renault, and Renault worker’s jobs?


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