FCA-PSA MERGER / The operation that makes the "prophecy" of Marchionne

It was December 2007 and a record year ended for Fiat: over 2,200,000 cars sold in the world. The house in Turin was competitive again and, as written in the report accompanying the end-of-year report, all the objectives set were "reached and in many cases exceeded". In the same record year, the Sec (American Stock Exchange Control Company) announced on March 14 an investigation against New Century Financial, one of the financial companies that generously provided credit for the purchase of homes in the US. The New York Stock Exchange suspended the title and the Dow Jones closed in red: many began to realize that New Century Financial was not an isolated case. With these signals the great financial crisis had begun, destined to become an economic crisis, but also an industrial one; and to upset many plans, including those of Fiat and Sergio Marchionne.

The enthusiasm in Turin, which was sky-high at the end of the year, led to completely wrong forecasts for the business cycle ahead. In the same report, released on 25 January 2008, it was read that "the current turbulence in the financial markets will have limited repercussions and, in the worst case, will be limited to the United States". Meanwhile, the feeling that the crisis could spread on a global scale was quite widespread. But, the note continued, "the Group considers this scenario unlikely".

Until September 2008, Fiat's business activities had gone well: turnover had grown by 8.4%. But, with the progress of the autumn, terrible confirmations arrived: the crisis was not only financial. The situation was much more complex: the recession would soon arrive in Europe as a crisis of confidence and, consequently, of consumption.

In the last three months of the year, Fiat's turnover plummeted by 19%. In December it was official: the entire car sector was in crisis. And so was Fiat. At the traditional pre-Christmas meeting with Group executives, Sergio Marchionne stated: "2009 will be the most difficult year of my life, the basic conditions on which we had defined our projects were wiped out. All plans must be reviewed because we will see strong shocks and new consolidation phases ”.

While Sweden allocated 2.5 billion to Saab and Volvo, France raised scrapping incentives and invested 6 billion in Renault and Peugeot's research into low environmental impact cars, Germany financed companies that credit buyers for cars, Italy used only social protection policies.

One thing to the Italian-Canadian manager was clear: it was necessary to act on two fronts, the internal one of the work organization and the external one of the new alliances. Also in December 2008, Marchionne stated in an interview with the weekly "Automotive News": "In the future there will be only five to six manufacturers; to cope with the crisis it is necessary to ally ourselves ”.

The alliance with Chrysler in 2009 which then became a merger in 2014 originated at that time. A few months later, US President Barack Obama entrusted the leadership of Chrysler to Marchionne, in his third default in history. In a very short time, Marchionne was able to heal and restore the Detroit house to profit, and from 2011 he was able to return the US $ 7.6 billion of public aid, six years in advance. On 1 January 2014, Fiat and Chrysler announced their merger: it was the masterpiece of Lucky Sergio that, over the years, has convinced even its most strenuous but honest opponents.

Marchionne had accomplished its historic mission: to project the Lingotto in the global market, something that the Agnellis have never managed to do in their history. Hence his very close relationship with John Elkann who had seen his dream come true and who, at the time of his death (July 2018), had fraternal words for the Italian-Canadian manager. After the birth of FCA, Marchionne and Elkann have not stopped working to remain among the five-six car producers of the new global course. GM, Volkswagen, Ford, Kia, Geely, Suzuki, Hyundai: they tried from East to West to find the right partner until to get to Renault – with which the alliance has been missing a breath – and now at Peugeot.

The FCA-PSA merger, whose details are widely known, is an operation win-win for a nascent car giant with almost 9 million vehicles. Certainly there are some unknowns for the future, but the larger variables are daughters of the economic cycle that is increasingly complex and difficult today. So it is wrong to interpret the alliance in an anti-Italian key as some commentators were quick to do. It is useless to hide the fact that there are and there will be critical issues: the inevitable process of rationalizing production capacities in Europe could have some repercussions on Italian plants. However, it cannot be ignored that not only the economic cycle but the transition from the auto industry to the same green new deal they are factors that would have affected the same way. Indeed, precisely because of the important investments made by PSA in this regard, FCA is strengthened. An important task, moreover, will be played by governments: let us hope that even the Italian one does its part, given that, for almost two years, the Department of Economic Development has been stopping even on corporate crises.

The future was therefore written. And it was accomplished only a year late: Destiny chose to stop Sergio Marchionne, not his car.

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