Fiat Chrysler Automobiles CEO Sergio Marchionne has again claimed that the automotive industry needs more consolidation, and that within a few years time, automakers that sell less than 6 million cars a year worldwide won’t be able to stay competitive. Toyota, Volkswagen and General Motors currently sell at around 10 million units a year, Renault-Nissan 8,5 million and Hyundai-Kia 8 million, which means at 4,75 million sales in 2014, FCA is trailing both its main competitors and its own “bar for succes”. Before 2020, Marchionne envisions himself making another “huge deal” with another automaker in order to reach sufficient economies of scale. He has also hinted that he would like to get either General Motors or PSA Peugeot-Citroën at his table to negotiate the possibilities of a merger. But I think he’s looking in the wrong direction.
Managers at the new GM still flinch when they recall the last deal the old GM struck with Marchionne, the one that forced them to either buy the remaining 80% of the money-losing Fiat brand they didn’t already own, or to pay them $ 2 billion to get out of the contract. They opted for the latter and Marchionne used exactly that money to turn Fiat around before buying Chrysler out of bankruptcy. PSA has been saying for a while they’re only interested in partnerships and collaborations, not in mergers. [Read more…]