Just two months after Fiat Chrysler Automobiles left Renault at the altar, its CEO is dropping hints he’s prepared to play the field.
Booming U.S. truck sales are fueling better-than-expected profit, and the Italian-American automaker has the breadth of brands to maintain momentum, CEO Mike Manley told reporters last week. But much like his late predecessor, Sergio Marchionne, the FCA boss doesn’t shy away from deal talk.
“There’s little in the marketplace that is not covered by the portfolio we have, as long as we do the things right that we need to get right,” Manley told reporters on Aug. 1 at Fiat’s U.S. headquarters in Auburn Hills, Michigan. “Could we accelerate something with a complimentary additional brand? The answer to that, of course, is 'Yes'.”
While Manley discussed there being prospects for a range of options, from all-out mergers to further collaboration with tech companies, Fiat has no acquisition plans at this time, a spokesman said. Fiat shares fell as much as 0.9 percent in Milan trading Monday while Renault shares rose as much as 2.2 percent in Paris.
Manley faces plenty of challenges, from turning around troubled operations in Europe and China to remaking the money-losing Maserati unit. But just as Marchionne did, he’s making the case that Fiat has scratched its way back to a healthy position and could get even stronger by tapping others for scale and technological expertise.
Sending a message
Manley spoke with reporters before The Wall Street Journal reported that top executives at Nissan Motor and Renault were trying to rebalance their shareholding structure so that talks between FCA and Renault could resume. The newspaper cited emails it reviewed and people briefed on the discussions.
Manley said Fiat has proved it’s agile enough to adapt when things don’t go according to plan. In the meantime, while the “industrial logic” of the Renault deal is still there -- it would have created a business with combined market value of about 35 billion euros ($39 billion) -- the French carmaker isn’t the only game in town.
Possibilities range from the more-comprehensive proposal FCA made to Renault for cooperation and partnerships, he said. “So are they the only opportunity? The answer to that question would be a definitive ‘No.’ ”
Some analysts suspect Fiat Chrysler hasn’t given up on a deal with Renault, and that its latest earnings served as a calling card to its Parisian paramour.
“Be in no doubt, these results are also aimed at sending a message to Renault and to the French government,” Bernstein analyst Max Warburton wrote in a July 31 research note. “The message is simple: We have a very profitable NAFTA business, strong finances and positive cash flow -- and a European business that would benefit from a strategic solution.”
One of the most enduring legacies of Marchionne’s decade-long tenure at the helm of Fiat Chrysler is that he turned it into a house of brands and staked the company’s future on two in particular: Jeep and Ram. Manley, who rose to prominence as head of Jeep and later Ram, is counting on them to provide the cash he needs to catch up with peers on electric investments and infuse Maserati, Alfa Romeo and Fiat with fresh product after years of neglect, he said.
“I think about where we were in the U.S. five years ago, six years ago, and the confidence that I have in Europe is that we have the ability to change the profile of some of the things that we are doing in a similar way,” he said.
Jeep still has “headroom” to grow in Europe, and adding product will help with Fiat Chrysler’s dismal utilization rates at its factories there, Manley said. He also plans to expand Fiat’s lineup in China, not only with electrified models to meet electric vehicle mandates but also with “white space” vehicles the company can produce locally to improve efficiency and cost.
Accomplishing all this won’t be easy. European auto sales are tanking, China -- where Fiat has what Manley calls a “tiny” share -- is experiencing a historic slump, and North America, the company’s earnings powerhouse, has reached the end of a decade-long expansion.
Manley lancia il sasso ma poi tira indietro la mano. Potrebbe essere molto utile un’alleanza ma non abbiamo problemi ad andare avanti da soli. Ci guardiamo intorno ma abbiamo brand fortissimi. Al contrario di queste dichiarazioni credo che FCA sia ormai alle strette per trovare un’alleato. Dalla morte di Marchionne la capitalizzazione è scesa di un terzo. Se l’economia americana rallentasse in modo significativo il motore del gruppo si paralizzerebbe. Chissà se il secondo tentativo con Renault sarà un successo.