No. 856
July 20, 2016
 

About The Autoextremist

Peter M. De Lorenzo has been immersed in all things automotive since childhood. Privileged to be an up-close-and-personal witness to the glory days of the U.S. auto industry, De Lorenzo combines that historical legacy with his own 22-year career in automotive marketing and advertising to bring unmatched industry perspectives to the Internet with Autoextremist.com, which was founded on June 1, 1999. De Lorenzo is known for his incendiary commentaries and laser-accurate analysis of the automobile business, as well as racing and the business of motorsports. Author. Commentator. Influencer. The Consigliere. Minister of the High-Octane Truth. De Lorenzo is considered to be one of the most influential voices commenting on the business today.

De Lorenzo's latest book is Witch Hunt (Octane Press  witchhuntbook.com). It is available on Amazon in both hardcover and Kindle formats, as well as on iBookstore. De Lorenzo is also the author of The United States of Toyota.

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The Autoextremist - Rants


Tuesday
Jul192016

KING CHAOS REIGNS IN AUBURN HILLS.

By Peter M. De Lorenzo

Detroit. Perception can be a wonderful thing for a company when managed properly. PR minions can illuminate, elaborate, orchestrate and craft a message that tells a story, projects a point of view and ultimately - through statements and actions - paints an enhanced picture of what the company stands for.

And much of that perception starts with the CEO, the public leader of the company, who, through “managed” communications, sets the tone for how the company is perceived by Wall Street analysts, the media and the mainstream public.

Not every automotive CEO has the natural gifts of an Alan Mulally, for example, but hopefully, if things go right, they can arrive at a communications cadence that fits and works for them in order to project a positive image for the company, and a positive personal persona as well.

Then there’s Sergio Marchionne.

The Greatest (auto CEO) Of All Time as he likes to be perceived, has carefully crafted and orchestrated his image as the “savior” of Chrysler ever since he was gifted the company by the Obama administration. Ably abetted by Gualberto Ranieri, his former PR bagman (who has now returned to the bucolic – and safe – confines of Italia in the biggest “duck-and-cover” move since the infamous nuclear attack elementary school drills from the early 60s), Marchionne’s every move was calculated to hoodwink Washington bureaucrats and bamboozle certain gullible members of the automotive media so that they would come to believe that he is indeed a miracle worker and possesses mysterious powers that other mere mortal CEOs can’t hope to fathom, let alone emulate.

Upon his official arrival – marked by an excruciating seven-and-one-half-hour death march of a briefing for media and analysts – the image of Marchionne was orchestrated to the last detail. His burgeoning bicontinental responsibilities; the 35 direct reports; the legendary work habits, the unctuous and combative statements; the arrogant boasts - it was all part of The Plan to project Marchionne as the unquestioned CEO of CEOs in the auto business and the architect of the "miracle" of Fiat's resurrection of Chrysler to employees and the media alike.

It seemed that the unstated goal of all of this was to create an almost otherworldly persona, a man of such talent and remarkable brilliance that if anyone deigned to utter a discouraging or negative comment in his direction, he or she would immediately be branded a fool or at the very least grossly misinformed, or worse, just simply unable to muster the mental capacity to understand what a privilege it was to be able to be granted an audience with The Great Man and to bask in the glow of his unrivaled brilliance.

And this manufactured “savior” persona worked well for Marchionne, at least for a while. Needless to say, I didn’t buy it, especially if you’ve read any of my columns over the years, but plenty of people who should know better bought into Marchionne’s image “plan” hook, line and sinker. And depressingly so too.

But of all the bombastic pronouncements made by Marchionne - including the flat-out inexcusable insults directed at GM CEO Mary Barra - and the myriad other maniacal verbal atrocities uttered by the unctuous prick, the one thing that has been consistently pounded into the media and analysts was the unbridled, runaway success of the company thanks to its Canadian-Italian “savior,” exemplified by the uninterrupted string of monthly sales increases for FCA (which stands at 75 months and counting). In fact it was his – and the company’s - most pivotal talking point and the company’s most combative battle cry, one that underscored that The Great Sergio was the smartest guy in the room. Any room.

But sharp minds in this business have openly discussed rumors that FCA was playing fast and loose with its sales numbers for years. Beyond the massive amounts of cash rebates on the hood and the ruthless - and reckless - use of subprime financing, the rumors - and lawsuits - from dealers pointed to an underbelly of orchestrated coercion sanctioned by FCA to shove cars, trucks and Jeeps down dealer throats - or else.

When it was confirmed on Monday that FCA is under investigation by the U.S. Securities and Exchange Commission for the way the automaker reports sales figures to the public in quarterly reports, it was absolutely no surprise to anyone, especially anyone who saw through the cloak of invincibility proffered by Marchionne and his espresso-swilling minions. FCA storytellers are swatting away the inquiry with the obligatory “we did nothing wrong and we’re cooperating fully with the investigation” but insiders in this business know that there’s a definite fire behind the smoke, and Marchionne may not be able to control the burn.

But there’s more to this story. There’s always more to the story when it comes to Sergio. While he’s busy trying to polish up the “C” in FCA to make the company attractive to suitors so that he and his Fiat heirs can then cash out and return to the homeland to ride out their languorous remaining days, pockets overflowing with billions – the Guangzhou Automobile Group Co. (GAC) seems to be the most ardent suitor at this juncture – the mood out in Auburn Hills among the True Believers and Chrysler veterans alike has taken a serious downward turn.

After interviewing FCA employees both current and recently departed, the manufactured sheen carefully orchestrated by Sergio for years is coming unraveled at a furious pace, especially internally. To put it in sports world jargon, Sergio has lost the team, and things are getting uglier by the minute.

The ultimate control freak, each time a senior executive leaves – which is almost a daily occurrence now as frustrated Chrysler employees run for the hills - Marchionne brands them as traitors or lightweights and then assumes even more control of the enterprise. He is now rendering decisions on even the most mundane things, while at the same time not bothering to replace senior leadership positions vacated by the mass exodus. Instead, he is dividing responsibilities to the existing staff that’s still, albeit tenuously, in place, even though he has taken his micromanaging to new levels of absurdity. This is all being done in the name of making FCA more attractive to suitors, or one suitor in particular as the case may be.

As for the morale out in Auburn Hills it is, quite simply, nonexistent. The company is in a state of near-total paralysis, “even worse than during the bankruptcy,” as one executive put it. And people are counting down the days before they can make their exits.

I said it was getting more ugly by the minute, but just how ugly is it out there? The running joke inside the company is that “Sergio’s entire team of direct reports is nothing more than a bunch of trained circus monkeys who do his bidding… and he is the Chief Organ Grinder,” regaled another executive. And those direct reports would never deign to tell The Emperor that he isn’t wearing any clothes.

Marchionne’s mood has grown desperately sour as well, as stories of him verbally attacking executives and threatening immediate firings are now commonplace. After one quality review, Marchionne lashed out to the high-level executives in the room (as told to me by one executive who was actually in that room), saying, “Either your people are incompetent or you lack leadership... your people are not allowed to make bad decisions... if they, do terminate them... or I will terminate you."

Did I say paralysis? FCA is now a seething cauldron of paranoia, a toxic working environment where no one can make a decision, except King Sergio. Sounds lovely, right?

As one executive put it for me, “My heart hurts for my company that I loved for over three decades.”

Is any of this shocking to me? No. Sergio Marchionne’s specialty is as a consummate dealmaker, something he actually is truly gifted at. But the rest of his carefully orchestrated persona is total, unmitigated bullshit. Because beyond his dealmaking persona, the stark reality is that he’s nothing more than a carpetbagging mercenary looking for one last big score, and his true persona is about to be exposed, once and for all.

And that’s the High-Octane Truth for this week.