Although it’s still something of a long shot, Fiat’s audacious plan to create a trans-global mega carmaker should have the rest of the car industry shifting uncomfortably.
Although Chrysler is in bankruptcy protection, Opel is ailing and Fiat is carrying lots of debt, the industrial logic is compelling.
If the three companies can be pulled together so they build virtually all their cars on just four basic platforms (all of which are modern, paid for and already in production) the rest of the global car industry might have something to think about.
Peugeot-Citroen, which produces 3.5m cars and whose sales are mainly within Europe, says it is not ‘phased’ by the idea of a mighty Opel-Fiat-Chrysler combine.
Ferdinand Piech, chairman of VW and the brains behind his company’s multi-brand strategy is rather more cynical. Although he was quoted as saying he was ‘glad’ whenever ‘less viable’ companies help each other, he also said that ‘three sick people in a bed don’t make one healthy person.’
Perhaps more bizarrely when asked about the prospect of the Fiat combine overtaking VW (the world’s third largest carmaker last year) Piech said "You cannot expect a world record when three footsore people try to run a marathon."
Aside from Piech’s love of odd medical metaphors, there should be discomfort about Sergio Marchionne’s plan. So long as he can secure funding (around 7bn Euros, £6.3bn) to tide the operation over for the first couple of years, he may pull the project off.
General Motors is certainly worried. Although it will maintain a minority shareholding in Opel/Vauxhall, it realizes that by selling GM Europe it is handing three world-class platforms over to Fiat.
Fiat wants the rights to the GME-engineered platforms royalty-free. GM says it wants 30 percent of Fiat Auto by way of compensation. Currently, Fiat is only offering 10 percent.
The real trick, though, will lie in brand management, design and marketing. Having a global spread and a range of common platforms is a great start, but unless the design concepts are up to scratch, the global alliance will come nothing.
Attractive new-generation Alfas, Chryslers, Jeeps and Opels are a pre-requisite for Marchionne’s plan to work. And some people might argue that developing around 15 convincing new models, under eight brands, in under four years will be a rather harder task than raising 6bn Euros.