FCA: No tie up talks

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Thread: FCA: No tie up talks

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    GMI Staff Member Premium Member nadepalma's Avatar
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    FCA: No tie up talks

    Apple should not try making a car on its own, Marchionne says
    FCA not in tie-up talks with anyone, CEO says
    March 2, 2016
    autonews.com

    GENEVA (Reuters) -- U.S. technology giant Apple should collaborate with carmakers to make a vehicle and use the expertise already available rather than attempt to do it on its own, Fiat Chrysler CEO Sergio Marchionne said.

    A source told Reuters last year that the California-based maker of phones, computers and watches was exploring how to make an entire vehicle, not just designing automotive software or individual components.

    No merger talks

    Meanwhile, Marchionne on Tuesday reiterated that FCA is not in tie-up talks with anyone at present, including PSA/Peugeot-Citroen, and a potential partner would need to have the same multi-brand strategy as FCA for a merger to work.

    FCA shares got a lift last week after PSA said it was open to strategic opportunities in the auto sector, sparking speculation the two companies could enter merger discussions, but Marchionne said there were no talks with PSA.

    Speaking on the sidelines of the Geneva show, Marchionne added that since the failure of his bid to tie-up with U.S. automaker General Motors, FCA had decided to carry on solo and was certain of reaching its ambitious targets for the years to 2018 even without a partner.
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    GMI Staff Member Premium Member nadepalma's Avatar
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    Re: FCA: No tie up talks

    "When it comes to consolidation, we have always focused our efforts on companies that have the same DNA...you cannot merge with someone that does not understand you," Marchionne said.

    "Volkswagen, GM are companies that understand this reality well, they continue to be points of reference ... and to some extent Renault-Nissan ... they have experience of multi-brands," he said. "It's difficult to imagine other alliances."

    Marchionne said FCA had been approached by other automakers but the options were not sufficiently attractive.
    When it comes to a merger or alliance, I understand the need to tie up with a partner that has a similar "DNA" and understands where you're coming from. That makes sense and it is prudent.

    But isn't it somewhat "irrational" to spurn other automakers that don't have the size, scale, or depth that companies like GM, VW, and Renault-Nissan? Isn't there something to be said about making smaller, but significant, gains along the way through medium-sized acquisitions or partnerships?

    Looking at this logically, it doesn't seem to make much sense to take a company that supports lots of brands (like VW or GM) and combine it with a company that also supports lots of brands (like FCA). This would create tons of overlap, duplication, and the real possibility of shuttering brands and divisions. In 2008, when some floated the idea of a GM + Chrysler merger, there was lots of speculation over what brands would be killed off, product lines ended, etc. I can only imagine that any kind of proposed merger between FCA and GM or VW or Renault-Nissan would create the same problem.

    From a car-enthusiast perspective (and even from a rational, business-building perspective), that doesn't seem to make a lot of sense.

    Rather, wouldn't you look for a partner (or partners) that compliment you own offerings, brings some kind of technological discipline or product knowledge to the table, and can grow together?

    If I were looking for size, scale, and spreading out costs (and was spurned by a larger competitor), I would almost seek to re-create what they have on my own. We'll probably never know who approached him, but if it were smaller outfits like Suzuki, Mitsubishi, Mahindra, Tata, Dongfeng, or others, what would be wrong with creating a technological or capital partnership with them in order to gain the depth that FCA's larger competitors have?

    It's almost like SM is saying, "We won't settle for a 3 course meal. If we can't have 9 courses, we'd rather go hungry!"

    Am I the only one who sees this as foolish? Isn't there a bit of logic and rationality to growing a business organically through partnerships and smaller mergers, than pursuing big moves in one fell swoop?

    Smaller partnerships have worked in the past, and they are currently working. Fiat's own 124 Spider (and the Abarth 124 Spider) are creating lots of buzz and interest, without a full-on merger or takeover, as it pertains to a single product line. The same is true of the Toyota/Subaru alliance with the BRZ/GT86/FRS. Toyota and PSA work on small cars together in Europe. Ford and PSA have worked on diesel engines together. Renault-Nissan has a good working relationship (when the French Government stays the hell out of their way) that have produced lots of commonality and savings. Even Renault-Nissan's own broad-partnership with Daimler has produced fruit without a full merger.

    Point is, what's wrong with buying a stake (or signing an industrial alliance) with Mitsubishi, Suzuki, Tata or any other number of smaller partners, to fill in the gaps in their own portfolio?

    I'm wondering if SM's ego is getting in the way here. This almost comes off like the need to add pop n' pizzazz over substance. Sometimes it's not making the biggest splash that gets you good returns; sometimes smaller, more disciplined decisions get you just as far with less pain (see Paramount/Viacom de-merger, etc).
    He added discussions were ongoing to find a contract manufacturer to build its small and midsize cars in the U.S., but declined comment on a possible timeframe.
    In light of his partnership comments, I'm wondering if anyone will want to work with him on a Dart and 200 replacement, even from a contract manufacturing prospective.
    Last edited by nadepalma; 03-02-2016 at 05:30 PM.
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    Re: FCA: No tie up talks

    How does Toyota do it?

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    Re: FCA: No tie up talks

    Quote Originally Posted by mbukukanyau View Post
    How does Toyota do it?
    Toyota grew organically to achieve huge revenue, size, and scale. There weren't a lot of acquisitions in Toyota's past. In fact, their recent announcement to take over the rest of Daihatsu is a bit out of character for them.

    SM's past mantra has been that there's lots of duplication out there, and lots of savings to be realized, when platforms, engines, and other oily bits share commonality with other automakers. He's right, of course. Toyota achieves this on their own through the sheer size of their empire. Others do too.

    If FCA doesn't have that size or scale to spread out costs, then he should be looking to other partners to gain what he is lacking; not by spurning any advances because they aren't "big enough" for him.
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    Re: FCA: No tie up talks

    This FCA tie up/merger tale has more twists and turns than Lombard St. in S.F. IMO it really is making Marchionne look ridiculous.

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    Re: FCA: No tie up talks

    FCA is through. They barely have the cash to make payroll let alone invest in new products. Where is there EV, fuel cell, hybrid strategy? They don't have any of that technology. What can FCA bring to another manufacturer? Debt is about it. They stopped making cars, the writing is on the wall.
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    Re: FCA: No tie up talks

    Quote Originally Posted by Burnout Czar View Post
    FCA is through. They barely have the cash to make payroll let alone invest in new products. Where is there EV, fuel cell, hybrid strategy? They don't have any of that technology. What can FCA bring to another manufacturer? Debt is about it. They stopped making cars, the writing is on the wall.
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    Re: FCA: No tie up talks

    Quote Originally Posted by Burnout Czar View Post
    FCA is through. They barely have the cash to make payroll let alone invest in new products. Where is there EV, fuel cell, hybrid strategy? They don't have any of that technology. What can FCA bring to another manufacturer? Debt is about it. They stopped making cars, the writing is on the wall.
    And where is that wall? I wanna see the writing for myself

    As Abraham Lincoln once said, trust but verify.

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    Re: FCA: No tie up talks

    Quote Originally Posted by nadepalma View Post
    Toyota grew organically to achieve huge revenue, size, and scale. There weren't a lot of acquisitions in Toyota's past. In fact, their recent announcement to take over the rest of Daihatsu is a bit out of character for them.
    Besides Daihatsu, they acquired Hino in 1967, who stopped making cars to focus on medium-duty trucks since. Hino is also in joint-venture with Isuzu in commercial bus area.

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    Re: FCA: No tie up talks

    Quote Originally Posted by Butz View Post
    As Abraham Lincoln once said, trust but verify.
    You know who really said that.
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    Re: FCA: No tie up talks

    Quote Originally Posted by cjh View Post
    smh...

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    Re: FCA: No tie up talks

    ****, Sergio is talking again.

    Will someone take the microphone from him please? Or at least unplug it.

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    Re: FCA: No tie up talks

    I wonder if FCA would have a better chance of merging with another automaker if Mr. Marchionne were to retire...

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    Re: FCA: No tie up talks

    With the level of desperation coming from Marchionne, any potential hopefuls for a partnership are probably running for the hills. Desperation is never a good sign.

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    Re: FCA: No tie up talks

    Marchionne has a point about mergers, but as mentioned earlier, what's wrong with sharing technical expertise?

    The Western nations have so much they could be offering to companies in emerging nations and even in China and India. Sharing the technology would help smaller, inexperienced firms to leapfrog in the marketplace. What small car builder doesn't dream of competing or want to compete with the likes of Ford, GM, Toyota or VW?

    Maybe a tie-up with another firm would be better for FCA than any one company buying them out lock, stock and barrel. Sergio should give that his full consideration.

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