Fiat Chrysler’s CEO Sergio Marchionne has been pretty vocal about his desires to merge with General Motors, even going so far as to say that such a union is inevitable in today’s market. Naturally, this kind of thing doesn’t excite die-hard fans of either company, and it isn’t exciting GM CEO Mary Barra.
Interestingly enough, one of the arguments Marchionne is using to justify a merger is an argument about capital waste in the automotive industry. He asserts that GM is one of the biggest waste generators, but with him as CEO things would turn around quickly. In other words, he believes that Barra and the other executives are squandering the car giant’s true potential.
At the same time, GM has been working diligently to make better use of its resources, considering that it had to be rescued from the brink of certain doom by the U.S. government during the Great Recession. Marchionne’s accusations are doing anything but building bridges with top brass in Detroit, who strongly believe that they’ve put the automaker back on track and are heading into a period of great prosperity.
GM executives have pointed out that if anything, Fiat Chrysler is in need of some help. For example, the company has no real electric powertrain technology and has been relying on muscle cars more than the competition. It also is well behind the competition when it comes to modular vehicle platforms, which is an irony considering Marchionne’s accusations.
Still, Marchionne said in an interview with Automotive News that merging with GM would generate about $30 billion each year in revenue, which is about $5 billion more than the two automakers get annually, combined.
Making things more complicated is the fact that former GM chairman Bob Lutz has gone public with his approval of a merger. He even said that during his tenure he seriously considered moving to acquire Chrysler.
Some are still upset about how Marchionne proctored the Fiat merger with Chrysler, especially dealerships that were dropped in the process. It’s also noteworthy that the Italian brands are struggling outside of the United States and the company is saddled with significant debt. By spinning off Ferrari, Fiat Chrysler will get a big financial uplift, one that could be enough to move forward with a GM merger.