Outsider’s Perspective: Why is it that FCA wants to merge again?

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There I was, laying quietly at home at 4 in the morning wondering just what the hell had caused me to seemingly lose the ability to sleep but let me all the tiredness to deal with when my brain decided to notice a very interesting pattern: Almost all of the new cars I want come from FCA.

After I finally managed to sleep (and had a strange nightmare about a bear with tiny little bears spurting out of it for no adequately-explained reason) I expanded on this idea. There are a few exceptions of course. Um…The Mercedes-Maybach S600 naturally. And I would turn to GM for all my enormous SUV needs because they’re the guys you call when you want to buy a car that’s absolutely massive.
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On the other side of the spectrum there’s rumors that that Honda is planning to stuff a bigger 1.0-liter engine to their lovely new S660 Roadster and bring it to America. And please whomever’s listening let it be the Amazing 230 horsepower V4 engine they put on the RC213V-S superbike because if it is it could very well become the best affordable sports car ever made. But for everything falling in between those two extremes the name at the top of the list comes from something that has Fiat Chrysler Automobiles written on its VIN tag.
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The FIAT 500 Abarth may not be the fastest hot hatch available on the market today but it’s the best-looking and the noisiest of them all. Sure the ergonomics are a bit iffy and from the back it looks taller than it is wide but there’s no denying that it is epic. And if you don’t want to deal with that much power, there’s the 105 HP TwinAir. Same character, half the fuel bill.The Chrysler 300C is the defendants of the traditional (read: not particularly sporty) American sedan, which is a segment that the Koreans and the Japanese are doing brilliantly at. The Jeep Grand Cherokee (“The most awarded SUV ever” according to FCA) somehow seems considerably less dull than the rest of its blandmatic competition, I’m guessing that the 6.4-Liter engine fitted to some of them may have something to do with that.
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And do I really have to go on detail about the Charger/Challenger/Wrangler/Viper/Quattroporte GTS/FF and why do I like them? I’m extremely excited by the new Fiat 124. And Sergio’s leadership hasn’t just been successful for enthusiasts and fans of the strange, but also to stockholders. Indeed they’ve just finished an absolute success of a year in 2014 with an 11% increase in revenue and a net profit of $1.3 Billion dollars. Which brings me to the title of this article. And, come to think of it, to another question. If FCA is doing so well and only getting better why is it that no one else wants to merge with it?
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Well. Macchione arguments that he wants to merge because economies of scale would mean more efficiency and less and considerably reduced development costs without the need to fire employees or compromise the image of the brands involved. Everyone wins, or so his presentation says so. However, the last time Chrysler tried this sort of thing we got the much maligned “Merger of equals” that created DaimlerChrysler…and the less we say about that the better. According to Forbes, the success rate of mergers and acquisitions is 50% or thereabouts. And if both companies are successful in their own right it’s understandable that they wouldn’t want to take the risk of spending a pile of money only for it to go neatly to the drain in a failed merge unless of course that gave them a monopoly (Looking at you Comcast/TWC).
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More concerning it would be if he actually does what he said and offers to merge with Google or Apple. Leaving aside the fact that both of them are essentially the anti-Fiat I’m genuinely concerned about what they’d do to influence FCA’s products. We’ve already seen Google’s idea of a car and I strongly suspect that Apple will want to charge $60,000 for a sleek and elegant city car with a 1.0-liter engine and as little buttons as humanly possible. And then what conglomerate will I think about when I am sleep-deprived?

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  1. Jofes2 Avatar
    Jofes2

    ” And Sergio’s leadership hasn’t just been successful for enthusiasts and fans of the strange”
    Has it?
    But apart from that, yes. I love the FCA cars too. I’ve been strangely obsessed with the Alfa Romeo Giulietta for some reason.

  2. Jofes2 Avatar
    Jofes2

    “And Sergio’s leadership hasn’t just been successful for enthusiasts and fans of the strange”
    Has it not just?
    http://upload.wikimedia.org/wikipedia/en/thumb/1/1f/Lancia_Logo.jpg/180px-Lancia_Logo.jpg
    But apart from that, yeah. I love FCA cars too. I’ve had a particularly strange obsession with the Alfa Romeo Giulietta for some reason.

    1. Gerardo Solis Avatar
      Gerardo Solis

      I’m working on something about Lancia. Stay tuned.

  3. longrooffan Avatar
    longrooffan

    I’m no expert on this matter, by any means, but I believe if you break out the revenues and profits from the RAM and Jeep divisions, the remainder of FCA is on rather shaky financial grounds. Having said that, I too like a lot of their stuff.

  4. JayP Avatar
    JayP

    This goes back to Iaccoca’s Global Strategy he had with Ford. Ford didn’t want it so he took it to Chrysler. He tried to merge with VW but at that time VW would have gone down with the ship. The joint venture in Diamond Star was interesting. That could have been VW… imagine what the Stealth would have looked like under that scenario.
    All FCA needs is an Asian partner to make Lee’s dream complete. Shared platforms, dealer network across the world, peace in our time.

    1. Vairship Avatar
      Vairship

      Like Mitsubishi, you mean? 😉

      1. JayP Avatar
        JayP

        At the time he wanted VW… I can’t imagine Piech would have been for that deal.

  5. Alff Avatar
    Alff

    All that and nary a mention of the 4C. I am disappoint.

    1. Tanshanomi Avatar

      I saw my first 4C on the road the other day. I just about climbed out the window of the truck. My wife, who was driving, was nonplussed.

  6. Lokki Avatar
    Lokki

    Come on and play fair. Lancia is the that inventor uncle who is half genius and half madman. When you’re flush with cash, you can afford to humor his crazy ideas, but when money is tight, it’s enough of a risk to fund Alfa

    1. Rover 1 Avatar
      Rover 1

      ….Who is the even crazier uncle, just out of the mental asylum, and some people wonder why he’s even there, because he was only adopted into the family recently to stop his assets falling into the hands of the Americans- who it turned out were already having an affair with the family patriarch – and that ended badly. And doesn’t he rattle on at length about motorsport in which he won things, before anyone else was born: and pretty much none since unlike Uncle Lancia.

      1. Lokki Avatar
        Lokki

        Nicely stated, but watch this Top Gear video, and then come back and apologize

        1. Rover 1 Avatar
          Rover 1

          I can never apologise for putting Lancia ahead of Alfa Romeo – but then I do own a Gamma Coupe, the perfect Lancia combination of sublime elegance, beauty and frustration.

    2. Jofes2 Avatar
      Jofes2

      Is the Lancia Voyager your idea of a reasonable business strategy?

      1. Lokki Avatar
        Lokki

        The Lancia Voyager is exactly the reason that Lancia should be put to sleep for a while, before the name is degraded any farther. On the other hand: Alfa Romeo 4C.

  7. Rover 1 Avatar
    Rover 1

    ” Marcchione arguments that he wants to merge because economies of
    scale would mean more efficiency and less and considerably reduced
    development costs without the need to fire employees or compromise the
    image of the brands involved.”
    And part of his problem is all of the previous joint ventures that Fiatsler has been involved with which are now limiting across the range commonality
    Fiat 500/Panda/Lancia Ypsilon= joint venture with Ford (Ka)at Tychy, Poland
    Punto/Alfa Mito/Lancia =joint venture with GM(Astra)
    Chrysler
    300/Dodge Charger = Daimler Benz platform (Mercedes W221)
    Doblo/Ram Promaster City= Made in Turkey by Tofaş, joint venture with PSA(Peugeot Citroen) and GM
    Fiorino= JV on GM based platform shared with PSA
    Ducato/Promaster= JV with PSA (earlier versions included Alfa Romeo versions)from Sevel ( Société Européenne de Véhicules Légers )Sevel was part owned by Fiat but they sold their share back to PSA in 2012.
    Scudo = another PSA JV, but when PSA took over in 2012 this allowed a Toyota version to be produced by PSA as well as the Fiat, Peugeot and Citroen versions. Reuters report that this JV with FCA will finish
    in 2017.
    And of course the FCA Tigershark engine started out as a joint venture with Hyundai as the Global Engine Alliance, before FCA bought Hyundai out.
    Add in Ferrari and Maserati’s partly assimilated ranges and it’s no wonder that Sergio longs for the economies of scale of VW, GM, or Ford.
    But Sergio Marcchione doesn’t help his case by introducing yet another JV, this time with Mazda for the new MX5 based Fiat 124.
    So much for model range commonality.

    1. Monkey10is Avatar
      Monkey10is

      Yes, but look on the bright side. You could buy a Fiat 500, a Fiat Doblo and a Fiat Punto; cut the back off each to turn them into pick-up trucks and you could have the trifecta of:
      a Fiatchero,
      a Fiatpage,
      and
      an El Fiatmino!

      1. Rover 1 Avatar
        Rover 1

        You’re right! There is an upside.