No. 919
October 18, 2017
 

About The Autoextremist

Peter M. DeLorenzo 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, DeLorenzo 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. DeLorenzo 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. DeLorenzo is considered to be one of the most influential voices commenting on the business today.

DeLorenzo'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. DeLorenzo is also the author of The United States of Toyota.

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The Autoextremist - Rants


Monday
Oct022017

SERGIO POLISHES THE GOLDEN CANNOLI AS THE SALE OF FCA IS NIGH.

By Peter M. DeLorenzo

© Autoextremist.com

Detroit. If you’ve been reading this website with some regularity over the last eight years, you know that I have predicted from the very beginning that the endgame for FCA CEO Sergio Marchionne was that he would sell off the “C” part of FCA for one big fat payday for himself and his Fiat family heirs/overlords as soon as he could pull it off.

And we are on the verge of that happening.

It’s hard to remember now, but back in those halcyon days when the U.S. government – completely out of options and afraid that if Chrysler went down it would take the entire automotive industry and its supplier network down with it – “gifted” Chrysler’s assets to Marchionne and his Fiat handlers for a song, people who should have known better considered him to be a savior of some sort. And what qualifies as “a song” you might ask? Not only did Fiat – by any measure a failing automotive enterprise in the twilight of its long, mediocre existence – not have to put any money of any consequence up for over a year after the deal was consummated, its total cash investment in Chrysler amounted to around $6 billion. (To put this in perspective, the Jeep brand alone was conservatively estimated to be worth at least that much at the time.)

From the moment Sergio got here, he was a walking, talking blusterbus, the self-appointed smartest guy in the room – any room. And I watched in horror as he and his minions hand crafted a persona – aided and abetted by certain card-carrying bootlickers in the automotive media – as a linguini-stained White Night based on the false premise that he would be the salvation of the poor wretches at Chrysler and that he would be the champion of the “little people.” And it was all unmitigated bullshit, because the only thing on Marchionne’s mind from Day One was to 1. Prop up Fiat, that perennial loser of an Italian car company (not counting Ferrari), and 2. Generate as much profits from an eventual sale of Chrysler’s assets to keep him and his Fiat handlers in cannoli and espresso for a long, long time.

Oh sure, he was different than the arrogant, hubris-filled posse sent here by Daimler, who managed to turn a $36 billion “merger of equals” into a company on the ropes in eight short years, and he was light years better – and more qualified – than the inept stumblebums at Cerberus led by “Minimum Bob” Nardelli. Marchionne was, after all, the consummate deal maker and an expert at turning other peoples money into untold riches, but make no mistake, there was going to be no silver lining with Sergio and FCA. He was the king of the carpetbagging mercenaries wrapped in a shiny wrapper made up of bombastic promises and blue-sky bullshit and he would be this industry’s cross to bear for going on nine long years.

Needless to say, it has been a long, strange trip.

We had to endure Marchionne’s endless posturing and his thinly veiled put-downs of other executives in the business because they, after all, just weren’t in his league. We watched as Marchionne made embarrassing overtures to GM that were personally insulting to Mary Barra and were rightly dismissed out of hand, because it didn’t take much to surmise that they were Marchionne’s feeble attempts at controlling his destiny, and predictably they failed miserably.

But that was just one in a long list of egregious behaviors that “The Great Sergio” unleashed on this business on his way to becoming the self-proclaimed “G.O.A.T.”

Let’s review, shall we?

In the earliest days, Marchionne led potential dealers down a primrose path promising untold riches – requiring them to spend millions on brick and mortar to build stand-alone Fiat stores – and he exacted those promises by dangling the Golden Cannoli: being able to sell Alfa Romeos and make millions on top of millions. Except that didn’t quite pan out, did it? The Fiat brand is on the ropes, and Fiat dealers were left bitter and furious that they had allowed the Italian Snake Oil Salesman to take them for a ride. And Alfa Romeo? It doesn’t matter how much praise the resident fanboys in the automotive media bestow on Alfa Romeo models, the bottom line is that there is no bottom line of any consequence for Alfa Romeo. It is a niche brand and it has always been a niche brand, and Sergio’s Audi-esque dreams for Alfa were unrealistic, misguided and flat-out ridiculous.

And we had to listen to the monthly din generated as FCA recorded one sales record after another, with Marchionne crowing about it incessantly until it came out that the minions assigned to backing up Sergio’s boasts had been cooking the numbers for years; in effect FCA had been reporting phantom sales numbers to make Sergio look good so he could continue stomping around and chewing the industry scenery, shouting “I told you I was a genius.” Well, he told us, all right.

Desperate to make the “C” in FCA attractive, Marchionne was churning out Jeeps and Ram trucks at a furious rate, delivering the lowest quality numbers in the industry at every turn, every year. But despite that, the ugly reality for Marchionne was that he had assets in Jeep, Ram Truck and the minivan (the outsized marketing posturing for Dodge is inconsequential; it is a fading brand of nostalgic muscle cars and menacing police cars with no future) and not much else.

Thanks to Sergio keeping his mind on the endgame and with his eyes filled up with dollar signs, FCA was woefully behind the industry in advanced technology development by every measure, and Marchionne knew it. And he couldn’t snap his fingers and make it all better overnight, either. So he embarked on a ruthless cost-cutting campaign in order to make FCA look more attractive to a buyer, slashing costs throughout Auburn Hills, especially out of future vehicle programs, which were pushed back, delayed or cancelled altogether.

So now what? Well, it has come down to this: As you read this Sergio’s payday is being furiously negotiated. And the buyer? None other than the Hyundai Motor Group. For Sergio the Great, it couldn’t be a more perfect fit, but let me be blunt here, for Marchionne anyone who has the dough-re-me would constitute the “perfect fit.”

Hyundai has the major league cash it will take to buy out FCA. They will gladly take Jeep, Ram trucks and the minivan (and plant), and discard the rest. And what about those convicted hacks in Washington who will stomp their feet in protest at the very idea that an iconic American brand like Jeep might be sold to the Koreans? This just in: It matters not one iota. FCA is a foreign-owned company and there’s not a damn thing any one of those politicians can do about it, even though many jobs will be lost and many lives in this area will be disrupted.

There is some solace in that Marchionne’s notion of “merging” with an automaker was nothing more than the sugarplum dreams of an unrepentant egomaniac. There was never going to be a merger with anyone, because much to Sergio’s considerable chagrin, he was never going to have the upper hand.

Marchionne has been in a race against time to make some sort of deal before he leaves FCA sometime in 2019, so he can retire among his cronies back in Italy and remind them that he is and will always be “The G.O.A.T.” And that they should never, ever forget it (as they slurp their espressos in sleepy cafes awash in never-ending Italian sunsets and never-ending piles of cash).

But at the bitter end Marchionne was nothing more than a calculated charlatan with a Brobdingnagian ego, and the only thing “great” about him is that he will go down as one of the greatest carpetbagging mercenaries in automotive history.

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