Fiat Chrysler Automobiles NV’s chief executive officer Sergio Marchionne is increasingly vocal about the need of the auto industry to further intensify its consolidation drive, with his calls largely unanswered so far.
Marchionne is starting to look like the “Gandalf” of mergers, after orchestrating the unification between Italy’s Fiat SpA and its subsidiary, the third largest US automaker – Chrysler Grroup LLC (now renamed FCA US). The executive has now declared his disposition to back words with raw data, he said recently in Amsterdam, where Fiat shareholders are meeting in their annual gathering. The data should prove to the world and auto industry rivals why a new round of consolidation would be highly beneficial. After the merger last year numerous media reports have panned the group – the world’s seventh largest automaker – seeking another unification, but every potential candidate ruled itself out of the equation swiftly. But Marchionne seems undeterred in his quest to potentially form a new auto industry leader, using every occasion to promote his idea. The rest of its peers seem unwilling to make such a disrupting move, with a demand turnaround seen now both in the United States and recession-battered Europe. The increases are slowly relieving the pressure the automakers faced to restructure in order to shed excess production capacity.
The FCA leader believes this is only part of the short-term picture, as rising development costs will quickly overthrow the earnings generated by the recovery. “This is a big issue,” commented the executive. “While other industries have adapted at the speed of light, we continue to be lethargic and unwilling to change. One of the most difficult things to do is to get the turkey to invite himself to Thanksgiving dinner,” he added.