FCA’s Marchionne goes against a history of unsuccessful alliances image

The chief executive officer of Fiat Chrysler Automobiles NV, Sergio Marchionne, has been preaching relentlessly about the need for the automotive industry to further consolidate, but his drive also goes against a history of failed attempts.

Actually, if the lessons history teaches us are finally listened, Marchionne would know what his rivals at GM or Ford already know too well – tie-ups, mergers and alliances have around 50 percent chances of success, sometimes even lower. Among the best known failures we could mention the in-house disaster called Daimler-Chrysler or GM’s rapidly decayed tie-up with Fiat – instances that Marchionne should know too well, since he presides over the automaker formed from the merger of Italy’s Fiat and America’s Chrysler. Then we could give as an example the defunct Premier Automotive Group – Ford’s luxurious division that once consisted of Jaguar, Land Rover, Aston Martin and Volvo. The reasons of failure are simple in their complexity – automakers are inherently monstrous, transnational firms that build machines from thousands of parts coming from all over the world. They each have their own culture. And sometimes the promised advantages never come forward.

These could be some of the reasons automakers so far have not responded to Marchionne’s rally calls, even as the executive believes the cost savings within four years could reach $6 billion annually. Fiat Chrysler shows as a success example their own merger of Italy and America, which has been in the works since 2009. Another one would be the Renault Nissan alliance. But both are work in progress – the French-Japanese are only now reaching true synergies and FCA has been trying to plug its holes for years.

Via Bloomberg