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The Wall Street Journal has got its mitts on a document detailing Fiat’s plans for world automotive domination and can reveal that the name for Sergio Marchionne’s plan is “Project Phoenix.” The plan reportedly calls for Fiat to take over Opel, Vauxhall, Saab and GM’s South African operations in addition to the Chrysler brands. Fiat would spin off this new auto empire into a new entity which would also include the Fiat, Alfa Romeo and Lancia brands, but not Ferrari and Maserati. Fiat would also close GM Europe’s plant in Luton, UK, and cease operations in Graz, Austria. The payoff? Annual savings of around €1.4 billion from 2015 onwards, according to Fiat’s estimates. The downside? A high chance of epic failure.
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It sounds like a good plan, if only you could achieve those goals without risking your own money. So I assume Marchionne will play with other people’s money? Like, having the governments cough up the dough?
I don’t mean to be contrary (but I’m going to be), but I was watching Sky News and according to their sources the UK operations are safe, it was the Germans who were fretting.
But even if WSJ’s sources are correct, it still makes little sense.
Do they honestly think that closing 2 plants in Europe will bring the cost savings they need? They will need to be more severe than that and maybe have to look to closing a few FIAT factories too.
Still, if you’re going to have a massacre, do it properly….
Ingvar, exactly. But the sad thing is, the governments are playing along this scam, with our money.
This is what corporate raiders have been doing for decades (using the assets of the target to collateralize the loans to buy it).
Why should we complain if the raider is from Italy, rather than from New York or Texas.
Yeah, then, it’s only to congratulate him as the only man in the room that actually has a plan. Even if there’s small chance to success, it’s a bold plan that actually has more merit than either GM’s or Chryslers new new new turnaround plans…
Interesting that the powers that be at Fiat expressly separate Ferrari from all this, while the Germans are busy bringing Porsche under the Volkswagen umbrella.
“And den I vill rule da Vorld! Bwa Haa Haa Haa!”
This new company is going to need a CEO that knows how to manage overlapping, cannibalizing brands filled with mediocre products, and how to manage too many employes and too many factories in high cost US and European countries. Anyone come to mind?
dwford Is that where all the GM moron management from the RenCen are headed after they get booted from GM. Sneaky Wagoner was this is plan all along.
Seriously though all this Fiat rule the world crap better not ruin my chances to get back into a RWD fun to drive Alfa. And Chrysler under the skin doesn’t count.
Seriously though all this Fiat rule the world crap better not ruin my chances to get back into a RWD fun to drive Alfa. And Chrysler under the skin doesn’t count.
What’s wrong with a RWD Alfa on an aging, overweight Mercedes chassis with a Hemi? Sounds perfect to me.
That sounds just like a lot of government plans, only the governments never have to worry about whether they can actually keep the revenue coming in.
I’m sure meglomaniac Marchionne’s plans for world auto domination don’t involve his company actually contributing any cash for any of it. The taxpayers of the respective countries will pay for it. I have a better deal for him: keep your crappy cars and mega-ego out of the U.S. We have enough of both already. I would rather drive a slice of New York pizza than a re-badged Fiatsler.
Call it project “Atlas Shrugged”.
Building a giant multi-national, multi-branded auto empire has always been a winning strategy…
Just ask Ford, GM, and Daimler how it worked for them.
Nissan/Renault has been the exception so far, but the potential Renault/Saturn marriage is a bad omen. I think their day will come.
Fiat sees the current crisis as a once in a lifetime opportunity to put together a global automotive empire on the cheap. High stakes with a high potential reward. Fiat may consider the alternative to be a long slow death of a thousands cuts at the hands of larger competitors. If the choice is a long slow death vs. a chance to hit it big, why not? Sometimes you really do have to go big or go home.
VW is another player which isn’t doing the hunker down thing. Lost in the noise around here is the announcement a few days ago that Porsche and VW are undertaking a complete 100% merger of their operations. In good times it would be hard to get the various factions to agree to this, but during difficult times more can be done.
http://www.cnn.com/2009/BUSINESS/05/07/porsche.merge/index.html?eref=rss_latest
VW/Porsche has been very successful at building “a giant multi-national, multi-branded auto empire”.
Many of my fellow citizens make the mistake of seeing the USofA as the only place on the world stage which really matters. The reality is that by many important measures the US is but one character on a world stage filled with other important players. The US has a little under 5% of the world’s population. Sometime in the next ten years the US will likely become the world’s second largest economy, and will drop further down the ranks as the other 95% of the world’s population continues to modernize and industrialize. VW and Fiat are both better positioned to participate in those trends than any US based car company is, save perhaps Ford.
Fiat getting its hands on GM’s Latin American distribution arm and the Jeep brand puts real upside into Fiat’s plans. Dodge’s truck line also has opportunities in developing markets. The Chrysler Hemi V-8 engine design and its Mexican factory are also another nice piece of technology for a global player to get their hands on. Fortune favors the bold.
Why is he not interested in Holden? He could get it for next to nothing, I imagine.
Now that’s a global empire.
Jeez, Aussies get kicked to the curb.
Louche,
Holden is small and geographically inconvenient.
The Fiat/Opel/Chrysler deal would be great competition for Volkswagen, if it weren’t for the fact that Fiat is strapped for cash. I agree it is the best available move for Marchionne to make, but his lack of working capital (outside of what the governments throw in) is a serious impedement.
The Chrysler Hemi V-8 engine design and its Mexican factory are also another nice piece of technology for a global player to get their hands on.
Why do you think that? Outside of a niche in the US the Hemi brand means nothing. Most gasoline automotive engines of note in the last 30 years have had “hemi”-style designs.
American Leyland is dead unless GM’s crash wins the title. Long live Global Leyland. Dodge Mozzarella anyone? Jeep Linguine?
Finally, an auto CEO with balls. Just like they used to make them. The fact that he is Italian should not surprise anybody. Lee Iaccoca was of Italian heritage and he did some great things at Ford and Chrysler. Did he make mistakes? Yea, and so will Sergio, but I believe his accomplishments will more than outweigh them.
If you remember the CEO of FIAT was educated here in North America, actually here in Ontario, Canada so he know a lot about how Automobiles are built, I believe he graduated from the University of Windsor, its right across the River from Detroit, so I would expect he know what he is doing with other money’s that seem to flow to him and FIAT!
I say good luck to him and to FIAT!
Dodge Mozzarella anyone? Jeep Linguine?
I’m speechless.
@ John Horner:
Ok, I hear you, and I definitely credit Sergio for his chutzpah, but I can’t think of anyone that undertook a more ambitious plan and succeeded. In fact, I can’t think of anyone that undertook a more ambitious plan. And yes, it is easy to criticize, and as an armchair CEO, its my job.
Picking up the corpses of these failed automotive businesses and lumping them together as one huge entity is just the easy part. Making the whole a viable business with products that people will spend their money on and that will be sold at a profit will be huge! Marchione may be a talented financier, I just hope he will be backed by equally talented product and marketing guys.
In fact, I can’t think of anyone that undertook a more ambitious plan.
Well, in the early 1900s William Durant brought Oldsmobile, Cadillac, and Pontiac plus two truck manufacturers (which became GMC) under one roof to form General Motors, then created Chevrolet on top of that. That combination lasted a good while.
But you don’t even have to go back that far. Ferdinand Piech bought SEAT, Skoda, Mann, Scania and probably a few other fair-sized european automotive companies I don’t recall right now, as well as trinkets like Lamborghini and Bentley, AND funded Bugatti’s development, as well as developing and producing several complete lines of unique revolutionary engine architectures, turning Volkswagen into one of the top 5 auto companies in the world, all in the course of a little over a decade. Quite a pace, but it’s been done, and successfully.
As long as GM keeps its operations in China, India and Latin America the company could actually survive as a global concern, should it come out of this mess.
One irony of GM is that they’re well situated in those growing markets.
In any case, as Kohelet said, there is nothing new under the sun. Lee Iaccoca wanted to turn Chrysler into Global Motors (I think he even talked of a hook up with Fiat).
SpeedRacerrrrr: I don’t see much value in the Hemi branding, but it is a very competitive high feature modern V-8 engine well adapted to both truck and automotive uses. It might be just what the doctor ordered for high end Alfas.
it`s an euphoria of equals. Both retardos don`t understand that those are products that drive companies ,not mergers. Gm can have zillions of brands, but if those brands are nothing else than rebadges and regrilled imports with poor reliability, no branding will save them.The same goes for Fiat. Both companies blindly believe that they will suck out from each other great things. Like what? Will you slap the massive Hemi in a fwd Alfa and call it a Bimmer killer?You must be joking. Both companies have equally unreliable products,and it won`t help them to compete with,say, honda. Because Honda, strangely enough, (does it even make sense for you guys?) engineers and designs every single of their freakin` product on their own engines and platforms,and they don`t need any freaking TARP, merger,or other agony prolonging vaporware. They simply do what a car company should do- BUILD GOOD PRODUCTS- THEMSELVES!!! Imagine that, rolling up sleeves and going to the drawing board,and actually, really, designing a vehicle!!!
Ronnie Schreiber:
“Lee Iaccoca wanted to turn Chrysler into Global Motors (I think he even talked of a hook up with Fiat).”
Iaccoca idea for “Global Motors” was a tie up of a Japanese, American, and European automaker. At the time he was thinking Mitsu, Chrysler, and VW. Fiat entered the picture in the late 80’s when the economy had turned down and Chrysler was losing money (as was Ford and GM). He thought a tie up with FIAT would give them access to technology and small car platforms and save them money. Not unlike today. Bob Lutz (yes that Bob Lutz) was totally against it. He felt that with the added resources of AMC’s engineering (he and Francois Caistang, the former Renault engineer, got along quite well and even conversed with each other in French, which drove Ioccoca crazy), could develop their own small car platforms. Lutz’s view won out and the alliance with FIAT fell thru.
After that Chrysler developed a new development process based off of Honda and started cranking out winners left and right. Before this, because Chrysler was so much smaller than Ford and GM (like Honda was so much smaller than Toyota and Nissan) they could not have more than one major program going at once. For example they couldn’t develop a totally new full size pickup and a totally new mid size sedan. So they stretched and shortened platforms to cover different markets. It didn’t help that Ioccoca went on a buying spree and purchased AMC, Gulfstream, and Lamborgini. At least the purchase of AMC gave them Jeeps and a lean engineering staff who knew how to do more with less.
Once the company got rolling with the Honda methodology they rolled out full, mid, and small car platforms, with a new V6, a new L4, and a new 5 speed manual in 3 consecutive years – ’93, ’94, and ’95. At the same time they introduced an all new Ram (the old one was 20 some years old) that went from 80,000 a year sold to 450,000 a few years later. The new ’96 minivan, based off of the midsize platform beat the all new Taurus (remember the jellybean?) for Motor Trend’s Car of the Year.
Chrysler didn’t need FIAT or anyone else back then (they sure didn’t need Daimler!) but that was then and this is now. The engineering staff is decimated and the people who made those great products in the 90’s are mostly gone, as is the organization that pushed the decision making process to the lowest levels (something the Germans could not stand). It’s back to doing one all new vehicle at a time (new Ram, new Grand Cherokee) or using an existing platform (Challenger). It can be built back up. But it will take time and money. We’ll have to wait and see what Sergio will do with it.
So Fiat wants to become the new “Global Motors” – didn’t work to well for the old GM
“The downside? A high chance of epic failure.”
How ’bout we give ’em a friggin’ chance before mentioning the “F” word?
Now Magna comes up with their “Project Beam”
GM Europe, not so fast FIAT….
“FRANKFURT, May 8 (Reuters) – Canadian-Austrian Magna International (MGa.TO) aims to create a European-Russian automaker making up to 5 million cars a year, German daily Rheinische Post said, citing company sources.
Under its proposal, dubbed project “Beam”, the company would take over General Motors’ (GM.N) German carmaker Opel jointly with Russian car company GAZ and Sberbank (SBER03.MM) to sell 1 million cars a year to the Russian market, the paper reported on Friday.”
http://www.reuters.com/article/marketsNews/idCAL8102168520090508?rpc=44
If Mr. MArchionne pulls this off, he’ll be considered one of the best executives of all time. If he doesn’t, the world will be all the poorer. I mean, damn if you damned if you don’t. I don’t know who thinks it’s a good idea to split all the world w/ just 3 choices: stark, dark German, boring/reliable (?) assorted Asian, or non-descript American as a third option. Go Fiat go! Keep the quirkiness alive please.