Marchionne directed ire at analysts who dont share his views on the benefits of the Fiat-Chrysler partnership

Marchionne directed ire at analysts who don't share his views on the benefits of the Fiat-Chrysler partnership

By any standard, the Fiat financial analysts’ conference on April 21 was a marathon. Five hours of Sergio Marchionne and his senior people telling the tale before it got to question time.

Then the Fiat Group CEO decided on giving his audience a warning: “Creating this plan has been the most gut-wrenching thing that I have had to do since I joined the company in 2004. You will express some level of doubt. You will say that this company (Fiat) is an average, middle-of-the-road player in Europe, with a serious business in Brazil, inadequate manufacturing and so-so distribution.

“But we have found in Chrysler the perfect partner and we have been able to agree on some very basic principles. It is a dream that I have had since 2004.”

It is for that long that he has recognised that Fiat was in no position to survive in the auto industry – a crazy business that has razor thin margins and practices that gives none of the players any reason to be proud of themselves.

“I used to think that the chemicals industry was the greatest destroyer of capital until I ran into this one. Now I suppose that it is the banks that have set a new standard for waste. But the level of arrogance in the auto industry is fantastic. There is nothing to be proud of.”

And, therefore, he was not prepared to take questions from auto analysts who did not recognise the benefits of the Fiat-Chrysler deal.

“Analysts have written vitriolic notes which have been hogwash, gadarene discussion, fundamentally offensive... the first time they write these things they should be labelled as inexperienced; the second time they need to be labelled as ignorant.

“I will accept any criticism, but not if it does not recognise the benefits of the partnership to ourselves and to Chrysler.

“Chrysler has lost market share, yes. But that is because Chrysler prefers to lose share than to destroy pricing. Fiat has shown with its first quarter profit how low we have taken our break-even.”

The present rules of the industry just do not work, he expanded. And unless the industry improved the rules “you people will not fund us.” And then he remembered: “In fact you didn’t fund the auto industry did you. In America?”

In a roundabout manner, he dealt with Fiat’s ability to square away UAW opposition which was the primary cause for US native car makers to fail to earn a sustainable living for so many years. He couldn’t report the content of the first meeting he had with Ronald Gettelfinger, its president, he said, because the language was so bad. But once they had reached agreement “there has not been one single objection to anything we have done.”

That’s the sort of anecdote Marchionne has to get into as he tries to get the auto analysts onside. He is going to need them because after the split of Fiat Auto and Fiat Industrial into two separate listed companies, Marchionne intends to stick around as chief executive of the car group.

He may have issues with the analysts who follow him. But the feeling is not mutual. When he ended his marathon presentation and Q&A session, the applause was rowdy and lengthy.

It’s good to have the man on our beat. Wonder whether he will generate anything for the auto industry to be proud of?

Rob Golding

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